Don't be embarrassed. You have to start somewhere. Here's a simple explanation of a mortgage and its elements.
- A mortgage is a loan. It's made up of the principal (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 principal! 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.
- 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 reclaim their losses.
- Amortization is the repayment of a loan through monthly payments.