Real Estate
What is Mortgage?
Definition
A mortgage is a loan secured by real estate. The lender holds a lien on the property, and if the borrower defaults, the lender can foreclose and sell the property to recover the balance. Mortgage terms range from 10 to 30 years with fixed or adjustable rates.
Real-World Example
A buyer takes a $400,000 30-year fixed-rate mortgage at 6.75%. The monthly principal and interest payment is roughly $2,594, and total interest over the life of the loan exceeds $533,000.
Why It Matters
The mortgage is the largest debt most households will ever carry. Rate, term and points decisions move lifetime cost by six figures.
Frequently Asked Questions
Is a 15-year mortgage always better?
Not always. It cuts total interest dramatically but raises monthly payment. It fits high-income savers, not first-time buyers stretching to qualify.