Mortgages Explained: Definition, Types, and Tips for Getting Approved

What is a Mortgage?

Definition

A mortgage is a loan used to purchase or maintain a home, plot of land, or other real estate. The borrower agrees to pay the lender over time, typically in monthly installments.

Legal Agreement

A mortgage is a written agreement that gives the lender the right to take possession of your home if you fail to repay the loan according to the terms you agreed upon.

Types of Mortgages

There are various types of mortgages available, such as:

• Conventional Mortgages: Require a minimum down payment of 20% and do not require government backing.
• Federal Housing Administration (FHA) Mortgages: Backed by the government and allow for lower down payments and credit scores.
• Veterans Administration (VA) Mortgages: Available to veterans and require no down payment or mortgage insurance.

Getting Approved for a Mortgage

To get approved for a mortgage, you typically need:

• Good credit score
• Stable income
• Down payment
• Documentation of income, assets, and debts

Additional Information

• Mortgage Broker: A mortgage broker can help you compare loan options and find the best deal.
• Mortgage Insurance: If you have a down payment of less than 20%, you may be required to pay mortgage insurance.
• Refinancing: You can refinance your mortgage to lower your interest rate or change the terms of your loan.

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