What Is A Mortgage?
Buying a home is a great way to start building your wealth. But how in the world do you purchase a $400,000 home without $400,000 in the bank?
The answer is, you take out a home loan, or mortgage. A mortgage is a loan that you borrow in order to purchase real estate.
A bank or mortgage company is the lender. They provide the money needed to purchase the home.
How It Works
You agree to borrow a certain amount of money, and you promise to pay the money back over a certain amount of time. You agree to pay a certain amount of interest on the money you borrowed also.
For example, let’s say you borrow $400,000 from the lender to buy your dream home. You agree to pay it back every month over 30 years with 4% interest.
There are many types of mortgages, and each one is a little different. A mortgage advisor can guide you to the right home loan to help you reach your goals.
Pay It Off
A document called a “lien” is recorded against the property. The lien states the terms of your agreement with the lender. It shows that the home is the collateral for the loan that you are taking out.
Once you fulfill the agreement and pay off the loan amount in full, you own the home free and clear!