Mortgages

Front

What is a mortgage?

Back

A mortgage is a loan specifically used to purchase real estate, where the property serves as collateral for the loan.

Front

What is the primary purpose of a mortgage?

Back

The primary purpose of a mortgage is to allow individuals to buy a home without having to pay the full price upfront.

Front

What does it mean to default on a mortgage?

Back

Defaulting on a mortgage means failing to make the required monthly payments, which can lead to foreclosure.

Front

What is foreclosure?

Back

Foreclosure is the legal process by which a lender takes possession of a property when the borrower fails to repay the mortgage.

Front

What factors can lead to mortgage default?

Back

Factors include loss of income, unexpected expenses, or taking on too much debt.

Front

What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage?

Back

A fixed-rate mortgage has a constant interest rate throughout the loan term, while an adjustable-rate mortgage has an interest rate that can change periodically.

Front

Why might someone choose a short-term mortgage?

Back

Someone might choose a short-term mortgage to pay less interest over the life of the loan, even though the monthly payments are higher.

Front

What is the role of interest in a mortgage?

Back

Interest is the cost of borrowing money, and it is paid to the lender in addition to the principal amount borrowed.

Front

What is the principal in a mortgage?

Back

The principal is the original sum of money borrowed in a mortgage, which must be repaid along with interest.

Front

What are closing costs in a mortgage?

Back

Closing costs are fees and expenses incurred during the finalization of a mortgage, including appraisal fees, title insurance, and attorney fees.