What is a Mortgage?
A mortgage is a type of loan you can use to buy or refinance a home. Mortgages are often referred to as “mortgage loans.” Mortgages are a way to buy a home without you needing to have all the cash upfront. Remember, the lender has the right to take your property if you fail to repay the money you’ve borrowed.
How Does a Mortage Work?
While mortgage lenders use lending ratios, such as the percentage of a borrower’s debt to their income, in deciding whether to approve a loan, a borrower’s household budget may determine how much they want to spend each month on housing. That monthly payment will determine how large a loan the borrower can expect to receive based on the term of the loan, down payment and interest rate. Other monthly expenses such as insurance, taxes, and HOA dues will also factor into the calculation.
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