We use mortgages to buy real estate without paying the entire purchase price up front.
The borrower repays the loan plus interest over a specified number of years until they own the property free and clear and if the borrower stops paying the mortgage, the lender can foreclose on the property.
You can get a mortgage through a credit union, bank, mortgage-specific lender, online-only lender, or mortgage broker.
No matter which option you choose, compare rates across types to make sure that you’re getting the best deal.
Mortgages come in a variety of forms.
The most common types are 30-year and 15-year fixed-rate mortgages.
Some mortgage terms are as short as five years, while others can run 40 years or longer.
Stretching payments over more years may reduce the monthly payment, but it also increases the total amount of interest that the borrower pays over the life of the loan.
Reverse mortgages are designed for older homeowners who want to convert part of the equity in their homes into cash.
These homeowners can borrow against the value of their home and receive the money as a lump sum, fixed monthly payment, or line of credit.
The entire loan balance becomes due when the borrower dies, moves away permanently, or sells the home.