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A mortgage is a loan from a financial entity where they agree to pay the seller of the property and you agree to pay them with interest. These are the two basic components of a mortgage loan -- principal and interest. Interest rates are calculated based on several criteria: your credit, prime rate, and your credit score. Before looking at properties, find out what your credit score is and what is on your credit. It's important for negotiating, such as a variable (adjustable) interest rate versus a fixed interest rate. You want the fixed one! The principal is the basic loan amount that you borrowed. Mortgages will be offered to you in 15- or 30-year agreements. Always take the 30-year. You can make extra payments (if the mortgage company allows) in the beginning of the loan (I'd have to get deep into explaining amortization -- look that up on dictionary.com) and pay off the house a lot sooner than if you're committed to the higher payment the 15-year mortgage will lock you into, as you may request that the extra payments go to your principal. Not every mortgage includes taxes and insurance. You may run an simulataneous "account" that is paid along with your mortgage payment called an escrow account. Your mortgage company pays your taxes and insurance (out of your monthly payment to them) on your behalf. If you want a consistent monthly payment, you may pay your property taxes and home owner's insurance separately. It's not required to run an escrow account. However, if you do not run the escrow, your annual property taxes will be due in one lump sum -- could be thousands. One more thing, if you do not have 10% down to put on the house, you will be required by your mortgage company to carry PMI (primary mortgage insurance). You will save yourself money in the long run if you are able to save up the 10% downpayment. "Refinance" means to take your original loan and rework it like it's a new loan -- the goal being a lower interest rate and lower payments. 2nd and 3rd mortgages are based on different things. The most common is an equity loan. Equity is the difference between what you owe for the house and its appraised value. You can receive a loan on that difference, using it as collateral. Good luck!

Source(s)

I am an accountant and have bought & sold many properties.

by KB

3 years ago

Asker's Rating: 

a mortgage is a loan from a bank (etc.) to buy a house. The key is that they give you up to 30 years to pay it off.

by curmudgeon- 3 years ago

A note to the bank that says I owe you for 30 years, and I borrowed some more money so now I owe you for 60 years, then finally, 3rd mortgage I owe I owe I owe.

by LuckyChucky- 3 years ago

It is a loan of money to buy a house. The bank pays the seller for your house, and you make payments to the bank, This payment is called a mortgage. Every mortgage includes "P I T I" which is principle, interest, taxes, insurance. Those are the 4 parts of your monthly payment. You need to read up on real estate before you shop. Don't let the language confuse you. Once you learn the terms, it gets much easier.

by Lefty- 3 years ago

A "home mortgage" is a loan a bank, mortgage company, or someone else lends to you in order to get a house. Basically you would get a house one of two ways, either buy an existing house from someone, or buy some land and have a new house built on it. What you should do is find a lender you want to use, bank, mortgage company, rich relative, etc. and give them information that will enable them to tell you how much they will lend you. Usually you would give them a copy of your last tax return, and also your W-2's or paystubs. There are many different types of mortgages; adjustable, fixed rate, negative amortization, interest only. Also, different terms, 15 year, 20 year, 30, and longer ones have also come into play. And different interest rates come into play to. What you should do is have your lender tell you roughly how much they will lend you and then try and find a property that you like for that amount, but also make sure that you feel you can afford the mortgage payments. Refinance is when you borrow money from one lender and use either all or some of the loan to pay off an existing loan that you already have. Usually you would do that to pay off a higher interest rate loan with a lower interest rate loan. 2nd and 3rd mortgages mean just that. They mean that you already have one mortgage on your house, and you have borrowed money (2nd mortgage) and possibly more money (3rd mortgage) on the house. The lender of the first mortgage has top priority for getting paid, then the 2nd mortgage, then the 3rd, then the 4th, etc. Usually because there is more risk involved in the 2nd, 3rd, and subsequent lenders getting paid back the interest rate is higher. Also, you have to pay payments on the mortgages at the same time, so usually it's not a good idea to have too many mortgages on a property.

by PepsiLime- 3 years ago

When used in real estate, a mortgage is a name used to describe the promissory note and the mortgage that you sign when you buy a property, they are two separate instruments. The way it works is; You as a borrower sign a promissory note that creates the promise to pay back the amount you borrow, the note has all the terms agreed upon between you and the lender described on the note. Then You as the owner of the property grant the lender a mortgage on the property you own which is the instrument that creates the security for the lender in the event that you do not pay on the promissory note. This security instrument called a mortgage gives permission to the lender from you the property owner, for the lender to take you to court and take the property as payment on the promissory note if you don't meet the terms of the note. You can not give a 1st position mortgage if you do not own 100% of the title in the property and without the property being encumbered by other mortgages, unless it is acceptable to the lender such as in the case of a 2nd mortgage. You can however borrow money on a promissory note without owning a property but you might be asked to provide different collateral than a property title ownership guarantee. If you need more information let me know. I hope this helped you understand. Buena Suerte

by newmexicorealestateforms- 3 years ago