Mortgage

This article uses too much jargon, which needs explaining or simplifying. Please help improve the page to make it understandable for everybody, without removing the technical details. (August 2023)

A mortgage is a way to use one's real property as a guarantee for a loan to get money. It is a type of collateral loan. Real property can be land, a house, or a building. Many people do this to buy the home they use for mortgage: the loan provides them the money to buy the house and the loan is guaranteed by the house.^[1] Mortgage closing costs are the fees paid when securing a loan, either when buying a property or refinancing. Lenders charge these fees in exchange for creating your loan. Closing costs cover things like your home appraisal and searches on your home’s title.^[source?]

In a mortgage, there is a debtor and a creditor. The debtor or mortgagor is the owner of the property, while the creditor or mortgagee is the owner of the loan. When the mortgage transaction is made, the debtor gets the money with the loan, and promises to pay the loan. The creditor will receive money back with interest over time (usually in payments made each month by the debtor). If the debtor does not pay the loan, the creditor may take the mortgaged property in place of the loan. This is called foreclosure.

In the 2008 American economic failure, creditors lent money to debtors who could not pay back that money. This lowered housing prices and hurt the economy.

1. ↑ "What Is a Mortgage?". Investopedia. Retrieved 2021-10-20.