MORTGAGES AND WHAT YOU SHOULD KNOW.

What is a Mortgage?
A mortgage is a loan in which property or real estate is used as collateral. The borrower goes into an agreement with the lender (usually a bank) wherein the borrower gets money upfront then makes payments over a set time span until he/she pays back the lender in full. A mortgage is frequently alluded to as home loan when it’s used for the purchase of a home.

How do Mortgages Work?
Mortgage loans are usually entered into by home buyers who do not have enough cash on hand to purchase the home. They are likewise used to borrow cash from a bank for other projects using their house as collateral.
There are several types of mortgage loans and buyers ought to assess what is best for their own situation before going into one. Types of loans are characterized by their term dates (for the most part from 5 to 30 years, a few institutions currently offer loans for up to 50 year terms), interest rates (these may be fixed or variable), and the amount of payments per period. 
Mortgages are like any other financial product in that their supply and demand will change dependent on the market. For that reason, sometimes banks can offer very low interest rates and sometimes they can only offer high rates. If a borrower agreed upon a high interest rate and finds after a few years that rates have dropped, he can sign a new agreement at the new lower interest rate -- after jumping though some hoops, of course. This is called "refinancing."

Why do Mortgages Matter?

Mortgages make larger purchases possible for individuals sufficiently lacking enough money to purchase an asset, like a house, up front. Banks go out on the limb making these loans as there is no guarantee the borrower will almost certainly pay later on. Borrowers take risk in accepting these loans, as a failure to pay will result in a total loss of the asset.

Home ownership has become a cornerstone of the American Dream. For most people, their home is their most valuable asset. Mortgages make home buying possible for many Americans. Mortgages are not always easy to secure, however, as rates and terms are often dependent on an individual's credit score and job status. Inability to reimburse enables a bank to lawfully foreclose and sell the property to cover its losses.

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