Frequently Asked Questions

A mortgage loan is a secured loan used to purchase or refinance real estate. The property itself serves as collateral, giving the lender the right to foreclose if the borrower fails to meet repayment obligations.

The borrower receives funds to buy or refinance a property and agrees to repay the loan over time with interest. Monthly payments usually include principal, interest, taxes, and insurance (PITI).

Both secure a loan, but a mortgage involves two parties (borrower and lender), while a deed of trust involves a third-party trustee who holds legal title until the loan is paid off.

Principal is the original loan amount borrowed, excluding interest and fees.

Interest is the cost charged by the lender for borrowing money, expressed as a percentage of the loan balance.

Amortization is the process of spreading loan payments over time so that each payment gradually reduces the principal while paying interest.

A fixed-rate mortgage has an interest rate that remains the same for the entire loan term, providing predictable monthly payments.

An ARM has an interest rate that adjusts periodically after an initial fixed period, based on a market index.

The interest rate reflects the cost of borrowing, while APR includes the interest rate plus lender fees, giving a broader picture of total loan cost.

The loan term is the length of time to repay the loan, commonly 15, 20, or 30 years.