What is a Mortgage?
A mortgage is a loan for your home and the lender will agree to hold title on your property until you have paid the loan in full. Loans are comprised of both principal and interest.
Principal is the actual amount of money you borrow. For example, if you borrow $800,000 on a $1,000,000 home purchase, your loan will be on the $800,000.
Interest is the cost of borrowing. How much you pay depends on how the lender views you as a credit risk, current interest rates in the market, term of the loan, and type of product you are using to finance your purchase, etc.
Interest on your mortgage is tax deductible up to certain limitations and is one of the most attractive aspects of owning as this will increase your take home pay allowing you to afford a higher monthly payment for a mortgage versus renting.
The approval process for a mortgage from the pre-approval to final loan approval for your purchase requires a lot of effort on your end as a buyer as well as shopping around to ensure you get the best rate possible from a reputable lender.
The financing section of our Buyer’s Guide is here for educational purposes to help you prepare and our advisors are here for any questions you may have.