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...