The terms “mortgage” and “home loan,” are used interchangeably to describe loans secured by the very value of the homes they are used to purchase. Mortgages are a nearly ubiquitous aspect of the home buying process, as roughly 70% of homeowners currently have mortgages and around 70% - 80% of all homebuyers use them.
There are a number of major players in the mortgage industry – including banks, mortgage brokers, and attorneys – but perhaps the most important of all is the government. Not only is the mortgage industry heavily regulated by government – on both the state and federal levels – but government agencies also buy or guarantee the vast majority of all the mortgages made each year.
It’s also important to note that while a mortgage can indeed help you realize your dream of owning a home – in that you don’t have to wait until you can afford an all-cash purchase – it can also get you into financial trouble if you don’t watch out. Mortgages are a deep and complex subject matter, and the trick is to get a feel for the landscape by versing yourself in mortgage basics as well as brushing up on industry jargon before learning how to pick a mortgage, avoid pitfalls, and save money in the process.
Reading the answers to the following important, frequently asked questions will help get you started: