What is a Mortgage?
A mortgage is a loan that the borrower takes out to purchase a home or property, and must be repaid with interest. The money from the loan is used as payment for the property and part of it is given to the lender as repayment of their investment. Home equity refers to how much equity (or value) the owner has in their home. If you own your home outright then your equity will be 100% the home value.
A mortgage is a type of secured loan, which means that the borrower gets a house as collateral for the loan. The borrower can borrow up to 95% of the value of their home, minus any outstanding mortgages they already have. Mortgage rates, which are influenced by changes in supply and demand in the credit markets, fluctuate with movements in inflation and economic growth.
The average American family spends about a third of their income on rent or a mortgage. That is a lot of money that could be used towards other expenses like groceries, clothing, and other expenses. There are two types of mortgages to choose from: fixed-rate and adjustable-rate mortgages. Fixed-rate mortgages will stay the same for the life of the loan while adjustable-rate mortgages will change according to economic events such as inflation and interest rate changes.