A mortgage is a loan – provided by a mortgage lender or a bank – that enables an individual to purchase a home or property. While it’s possible to take out loans to cover the entire cost of a home, it’s more common to secure a loan for about 80% of the home’s value.
Mortgage Definition [Update] 2022
A mortgage loan or simply mortgage (/ˈmɔːrɡɪdʒ/), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged.
The loan is "secured" on the borrower's property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property ("foreclosure" or "repossession") to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms.
The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning "death pledge" and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure. A mortgage can also be described as "a borrower giving consideration in the form of a collateral for a benefit loan.
an agreement that allows you to borrow money from a bank or similar organization, especially in order to buy a house, or the amount of money itself
How to pronounce 'mortgage' in Standard British English pronunciation.
Today's national mortgage rate trends
For today, Tuesday, June 21, 2022, the average rate for the benchmark 30-year fixed mortgage is 6.01%, an increase of 14 basis points from a week ago. If you're looking to refinance, the national average 30-year fixed refinance rate is 5.97%, up 8 basis points over the last seven days.
Meanwhile, the average 15-year fixed refinance rate is 5.26%, up 26 basis points from a week ago. Whether you are looking to buy or refinance, Bankrate often has offers below the national average to help you finance your home for less.
Types of mortgage
7 Types Of Home Loans For All Home Buyers
- Conventional Mortgages
- Fixed-Rate Mortgages
- Adjustable-Rate Mortgages
- FHA Loans
- USDA Loans
- VA Loans
- Jumbo Loans
People who default on their mortgage repayments may have their home repossessed.
Having a big mortgage is a real drain on your earnings.
After falling behind with his mortgage repayments he now faces eviction from his home.
She got behind with her mortgage and the house was repossessed.
They were forced to give up their home because they couldn't pay the mortgage.
House mortgage meaning
What Is a Home Mortgage: A home mortgage is a loan given by a bank, mortgage company, or other financial institution for the purchase of a residence—a primary residence, a secondary residence, or an investment residence—in contrast to a piece of commercial or industrial property.
In a home mortgage, the owner of the property (the borrower) transfers the title to the lender on the condition that the title will be transferred back to the owner once the final loan payment has been made and other terms of the mortgage have been met.
Mortgage vs loan
A loan is a relationship between a lender and borrower. The lender is also called a creditor and the borrower is called a debtor. The money lent and received in this transaction is known as a loan: the creditor has "loaned out" money, while the borrower has "taken out" a loan. The amount of money initially borrowed is called the principal.
The borrower pays back not just the principal but also an additional fee, called interest. Loan repayments are usually paid in monthly installments and the duration of the loan is usually pre-determined. Traditionally, the central role of banks and the financial system was to take in deposits and use them to issue loans, thus facilitating efficient use of money in the economy. Loans are used not just by individuals but also organizations and even governments.
There are many kinds of loans, but one of the most well-known types is a mortgage. Mortgages are secured loans that are specifically tied to real estate property, such as land or a house. The property is owned by the borrower in exchange for money that is paid in installments over time. This enables borrowers (mortgagors) to use property sooner than if they were required to pay the full value of the property upfront, with the end goal being that the debtor eventually comes to fully and independently own the property once the mortgage is paid in full.
This arrangement also protects creditors (mortgagees). In the event that a debtor repeatedly misses mortgage loan payments, for example, his or her home and/or land may be foreclosed upon, meaning the lender once again takes ownership of the property to recoup financial losses.