A mortgage lending is an agreement between the person and a lender that gives the lender the right to take the person’s property if they gradually fail to repay the money they have borrowed plus the interest.
Mortgage loans are used for buying a home or borrowing money against the value of a home the person already owns.
Things to look for in a mortgage
- The size of the loan
- The interest rate and any associated points
- The closing costs of the loan, including the lender’s fees
- The Annual Percentage Rate (APR)
- The type of interest rate and to check whether it can change (is it fixed or adjustable?)
- The loan term, or for how long they have to repay the loan
- Whether the loan has other risky features, such as a pre-payment penalty, an interest-only feature, or negative amortization
- Focus on a mortgage that is affordable for us and given our other priorities, not on how much we qualify for.
How can a mortgage be given?
Lenders will tell us how much we are qualified to borrow and how much they are willing to lend us. Many online calculators compare the borrower’s income and debts and find the most valuable answers. But how much anyone can borrow is very different from how much they can afford to repay without stretching the budget for other essential items too thin. Lenders do not take into account all the family and financial circumstances. To know how much anyone can afford to repay, they’ll need to take a hard look at the family’s income, expenses, and savings priorities to see what fits comfortably within the budget.
From where did the word mortgage come from?
The word mortgage comes from Old French mortgage, which generally means dead pledge, from mort (dead) and gage (pledge). According to the online dictionary, it is so called because the deal dies when the debt is paid or when a payment fails.
Function of mortgage
The primary function of a mortgage is to supply a home buyer with enough money such that they can purchase a home, either by buying an existing house or having a new one built. Mortgages pay the seller or builder directly to them and set out a timetable for the repayment of that amount the borrower can afford.