What is a morgage and how does it work?

Answer 1

A mortgage is just a name for a home loan. It really isn't any different than a car loan, or any other kind of loan, other than the fact that it is for a house. Most mortgages are for 30 years, although you can find mortgages for 15-50 years.

Answer 2

A mortgage is a loan with property as the collateral (the collateral is what the bank can take away from you if you don't pay your loan back) which they allow you to pay back over many years time, say 25 years.

They give you a loan to buy a property with a certain percentage of interest you'll pay. Interest is what you pay above and beyond repaying the original loan, it's like a fee for them on top of the loan.

So if you got let's say a $100,000 loan, with some amount of interest added to the payments you could pay let's say a total of $200,000 over 20 years time.

Thus it's best to put the largest down-payment you can on a property to minimize the size of the mortgage, which keeps your interest payments to a minimum.

Answer 3

Did you mean Mortgage?

mortgage

mort·gage [máwrgij]
noun (plural mort·gag·es)
1. loan agreement for property: an agreement by which somebody borrows money from an organization and gives that organization the right to take possession of property given as security if the loan is not repaid.
It is the main means by which people purchase homes.
2. contract between borrower and lender: a written contract describing the agreement between a borrower and a lender by which a loan is given against security
3. total money borrowed: the total amount of money lent to a borrower by a money-lending organization, with some of the borrower’s property being given as security
4. loan installment to be repaid: the money paid by a borrower, usually monthly, to a bank or savings-and-loan association until the entire sum borrowed by a mortgage agreement has been repaid


transitive verb (past mort·gaged, past participle mort·gaged, present participle mort·gag·ing, 3rd person present singular mort·gag·es)
1. grant claim to ownership of property: to give a claim to legal possession of property to a money-lending organization such as a bank or savings-and-loan association as security for a loan
2. pledge riskily: to pledge something when risk is involved (informal)


[14th century. From Old French , from mort “dead” + gage “pledge,” because property pledged as security is lost to a mortgagor who fails to repay the loan.]


-mort·gage·a·ble, adjective