what is mortgage

A mortgage is a type of loan used to finance the purchase or refinance of a property, such as a home or land. It is an agreement between the borrower and the lender, where the borrower promises collateral to the lender in the form of the property being financed. If the borrower fails to meet the terms of the mortgage, such as not repaying the money borrowed plus interest, the lender has the legal right to repossess the property. Mortgages are typically repaid over a set number of years, with the borrower making small, equal, fixed monthly payments. The cost of a mortgage depends on factors such as the type of loan, the term, and the interest rate charged by the lender. When applying for a mortgage, borrowers should consider factors such as the size of the loan, the interest rate, the closing costs, and the loan term. It is important to note that the amount a borrower is qualified to borrow may be different from how much they can afford to repay without stretching their budget too thin.