what is a mortgage?
By gemini52981
@gemini52981 (158)
Canada
February 20, 2007 8:59pm CST
OK this might seem like a very dumb question, as I am old enough to know what one is by now, but I have no idea. Can someone please explain to me what a mortgage is, and why you need a mortgage before buying a house?
2 responses
@shoelover (896)
• Australia
21 Feb 07
A mortgage is generally what you have when buying a house if you do not have enough money for cash for the complete purchase. The bank or lending society takes into account your wages and other loans ect to ensure you can meet the repayments. They can also tell you from this how much you can borrow and then you will be able to find a house within your budget. Hope this helps
@gemini52981 (158)
• Canada
21 Feb 07
thank you for explaining this to me in plain english so that I could understand properly. When the time comes, how would I go about finding out about a mortgage, or when would I need to start looking into one, and where to get one from?
1 person likes this
@shoelover (896)
• Australia
21 Feb 07
First thing you should do is start saving for your deposit. I think they usually ask about 20 percent of a purchase price. I am not sure how much houses go for your area but your local paper would be the perfect place to look. Once you know that you will know approximately how much to try to save. If you do have a savings account a good savings history will go well in your favour and your own bank may be able to help you with the mortgage when you are ready. Good Luck.
@Only1Andrea (796)
• United States
21 Feb 07
A mortgage is a legal document that secures the note and gives the lender a legal claim against your house if you default on the note's terms. In effect, you have possession of the property, but the lender has an ownership interest (called an "encumbrance") until the loan has been fully repaid. The lender agrees to hold the title or deed to your property (or in some states, to hold a lien on your title or deed) until you have paid back your loan plus interest.
Hope that helps!
