Mortgage

What Is a Mortgage?

A mortgage is a secured loan used to buy a home or property. The property itself serves as collateral, meaning the lender can foreclose if you fail to make payments.

Types of Mortgages

• Fixed‑rate: interest rate stays the same for the life of the loan (most common: 30‑year and 15‑year)
• Adjustable‑rate (ARM): rate changes periodically based on market indexes; often starts lower but carries more risk

How Much Does It Really Cost?

On a $300,000 loan at 7% for 30 years, you’ll pay over $215,000 in interest alone. That’s why even a small difference in interest rate can save tens of thousands of dollars.

Key Terms

• Down payment: usually 3‑20% of the home’s price
• PMI: private mortgage insurance required if down payment <20%
• Amortization: the process of gradually paying off the loan through scheduled payments

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Last verified: July 2026