Topic
Mortgages
A mortgage is a loan secured by real property, typically repaid over time through scheduled payments that can include principal, interest, taxes, and insurance.
At a glance
- Collateral
- Real property
- Key comparison document
- Loan Estimate
Overview
A home mortgage creates a legal obligation secured by the property being purchased or refinanced. The interest structure, loan term, fees, down payment, mortgage insurance, taxes, and homeowners insurance all affect the true monthly and lifetime cost. Borrowers should compare the standardized loan disclosures rather than only the advertised rate.
The payment can contain several pieces
The principal and interest payment repays the loan itself, while escrow can collect amounts for property taxes and insurance. Some loans also require mortgage insurance. Because these components can change differently, the total monthly housing payment can change even when the underlying principal-and-interest schedule is fixed.
Compare more than the headline rate
Points, lender fees, closing costs, loan term, rate type, prepayment features, and mortgage insurance can materially change the economics of a loan. The Loan Estimate and Closing Disclosure are designed to make those terms easier to compare and verify.
Sources and review
MOOR's explanatory text is supported by the following source links.
- Explore loan choices — Consumer Financial Protection Bureau
- Buying a Home — U.S. Department of Housing and Urban Development