Understanding Mortgages

Front

What is PMI?

Back

Private Mortgage Insurance, a type of insurance that protects lenders in case the borrower defaults on the loan.

Front

What does it mean if a mortgage is 'secured'?

Back

It is backed by collateral, such as the home, meaning the lender can take possession of the home if the borrower fails to repay.

Front

What is a mortgage?

Back

A loan to buy or refinance a home, where the property itself serves as collateral.

Front

What is included in a monthly mortgage payment?

Back

Principal, interest, and other fees such as property taxes and homeowners insurance.

Front

Who might need a co-signer for a mortgage?

Back

A borrower with weak or no credit history may need a co-signer to qualify for a mortgage.

Front

What is the principal in a mortgage?

Back

The original sum of money borrowed to purchase a home, excluding interest.

Front

What is interest in the context of a mortgage?

Back

The cost of borrowing money, expressed as a percentage of the principal, paid to the lender.

Front

What is a down payment?

Back

An initial upfront payment made when purchasing a home, typically a percentage of the purchase price.

Front

What is the difference between fixed-rate and adjustable-rate mortgages?

Back

Fixed-rate mortgages have a constant interest rate throughout the loan term, while adjustable-rate mortgages have rates that can change periodically.

Front

What is a mortgage term?

Back

The length of time over which the loan must be repaid, commonly 15 or 30 years.