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MORTGAGE

Definition

A mortgage is a legal agreement by a bank or other financial institution and a debtor.  The financial institution lends money with interest and takes ownership of the property if the debtor defaults.  This is a type of secured debt.

Why It's Important

Most people that purchase homes, have to get a mortgage to afford it.  In my opinion, mortgages are a form of "good debt" although cash is always king!  There are different types of mortgages a borrower can get.  For instance, a borrower can get a 30-year conventional loan with a variable interest rate or a 30-year FHA loan with a fixed interest rate.  There are many combinations these loans can come in and your best defense is to learn as much as you can before using one to purchase a home.  Some of these terms will be covered in the upcoming Wednesday Words of the Week.

Personally, I have a 30-year FHA loan with a fixed Interest rate of 4.25%.  I would like to refinance at...

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