Everything You Wanted To Know About A Mortgage Chapter 1

What is a mortgage?

A mortgage is a loan specifically used to buy a property or other real estate. It is a loan from a bank or lender with the understanding that you will pay back the loan over a specific amount of time. For the vast majority of loans, interest is also part of the loan.

What are the different types of mortgages available?

In the U.S., the most common types of mortgages available are (please be aware this is just the most common – there are other mortgages available):

Fixed-rate mortgages: Loans where the interest rate stays the same for the entire loan term.
Adjustable-rate mortgages: Loans where the interest rate can change periodically, generally after an initial fixed period.
FHA loan: This loan is insured by the Federal Housing Administration, and it typically requires a lower down payment and is sought after by many first-time homebuyers.
VA loan: A loan that is available to eligible veterans, active-duty service members, and surviving spouses. These loans generally have favorable terms and no down payment requirement.
USDA loan: These loans are offered by the U.S. Department of Agriculture for rural homebuyers with low to moderate incomes.
Jumbo loan: This is a mortgage loan that exceeds the conforming loan limits set by government-sponsored entities like Fannie Mae and Freddie Mac.