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Mortgage ABCs

By Tammy Stoner, FrontDoor.com | Published: 11/01/2007

Learning basic terminology can make complicated mortgages a little more clear.

Learning basic terminology can make complicated mortgages a little more clear.

A mortgage is a loan. It's made up of the principle (the amount of the loan) plus the interest (money paid to the lender for the privilege of borrowing their money). Here's a shocking mortgage reality: You often end up paying more interest than principle! That's right, the loan can cost more than the house.

Go play around with the numbers (and numb yourself to the shocking cost of borrowing money) on our mortgage calculator.

A mortgage broker is the liaison between you and the lending institution (known officially as the "lender") that will be offering you a mortgage. You can bypass this person and deal directly with the lender.

The title is proof you own the property. As long as you owe on your mortgage the lender has a lien against your title, meaning if you don't make payments, the lender can unplug the jukebox and sell your home right out from under you to re-claim their losses.

Amortization is the repayment of a loan through monthly payments.

GO TO: Part 1: Evaluate Your Life and Finances

GO TO: Part 2: Shop for a Loan

GO TO: Part 3: Find a House

GO TO: Part 4: Close the Deal

GO TO: First-Time Homebuyer's Guide

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