A Mortgage Loan is money borrowed from a Lender in exchange for your promise to repay over time which will allow you to obtain a home of your own. Because buying a home is a larger purchase, mortgage loans are typically financed for as many as 30 years allowing you to manage your finances over time.
Because the lender is providing the funds for the purchase of the home, the lender is allowed a claim (lien) on the home as collateral which gives them the piece of mind that you intend to pay them back over time. Although no one goes into a mortgage with the expectation they will not pay the lender back, the lender does have the legal right if you default on your loan to take the home back through the legal process known as foreclosure.
Mortgage loans are a critical component of buying a home loan. Typically mortgage loans have a much lower rate of interest than any unsecured debt you may have, like a credit card, and are typically written at a much lower fixed rate of interest allowing you to pay back the home over time through what is known as amortization.
Once the loan is paid in full either over the 30 year window or earlier should you choose to pay more and amortize the loan faster, the lender will release their claim and give you full ownership of the home.
In order to qualify for a home loan, you should speak with a mortgage professional (MLO) who will explain the process thoroughly and provide you with the details of how much mortgage you can afford before you attempt to shop for a new home.
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