Mortgage
A loan secured by real estate, used to purchase or refinance property.
What is Mortgage?
A mortgage is a type of secured loan in which real estate serves as collateral. The borrower receives funds from a lender to purchase property and agrees to repay the loan plus interest over a fixed term, typically 15 or 30 years. If the borrower fails to make payments, the lender has the legal right to seize the property through a process called foreclosure. Mortgages are the primary means by which individuals purchase homes and one of the largest financial obligations most people will ever take on. Key terms include the loan amount, interest rate, loan term, and monthly payment.
Example
A homebuyer purchasing a $500,000 home with a 20% down payment ($100,000) takes a $400,000 mortgage. At a 7% fixed rate over 30 years, the monthly payment is approximately $2,661. Over the full loan term, total interest paid exceeds $558,000 — more than the original loan amount — illustrating how long-term borrowing costs add up.
Source: Consumer Financial Protection Bureau — Mortgage Basics