Mortgage Loans

More often than not, the term mortgage pertains to what is really defined as a mortgage loan. A mortgage loan is defined as a loan guaranteed by a real property through a mortgage. To better understand mortgage loans, one should be familiar with the following components: the property, the mortgage, the borrower, the lender, the principal, the interest, and the foreclosure.

The property points out to the physical residence which is being financed.

The mortgage is the legal instrument used to guarantee the lender that the borrower will satisfy or fulfill the agreement.

The person who is borrowing or applying for the loan is referred to as the borrower and the party offering financial solution to the borrower is called the lender.

The principal is the original or initial amount of the loan while the interest is the charge to be paid on top of the principal for the use of the lender’s money.

The foreclosure, or repossession as known to some, is regarded as the option of a lender to take possession of the property or foreclose the loan due to inevitable circumstances.

There are many mortgage loan types and they vary because of the said components. The most common mortgage loan type is the amortized loans which can be further classified into fixed-rate mortgages and adjustable rate mortgages.

Other types include:

• Balloon mortgage
• Buydown mortgage
• Endowment mortgage
• Flexible mortgage
• Participation mortgage
• Repayment mortgage
• Seasoned mortgage
• Non-conforming mortgage