Mortgage Glossary
Mortgage
A loan used to buy a home, where the home itself serves as collateral. If you stop making payments, the lender can take the home.
What It Means
A mortgage is a legal agreement between you and a lender. The lender gives you money to buy a home, and you agree to repay it over time — typically 15 or 30 years — with interest.
What makes a mortgage different from other loans is that the home is used as collateral. That means if you stop making payments, the lender has the legal right to foreclose and take ownership of the property.
Mortgages come in many types: fixed-rate, adjustable-rate, FHA, VA, conventional, and more — each with different requirements and trade-offs.
Real-World Example
"You want to buy a $400,000 home but only have $20,000 saved. A mortgage lets you borrow the remaining $380,000 and pay it back over 30 years in monthly installments."
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Definitions are for educational purposes only and do not constitute financial or legal advice.