7.1. Mortgage Basics

Talking with a mortgage broker can feel like conversing in a language you studied for a year in high school. You might get the gist of what he's saying, but you might not fully understand what everything means. Don't get lost in translation. Before you apply for a mortgage, make sure you understand the basics.

7.1.1. What Is a Mortgage?

That's easy. A mortgage is money you borrow to buy a house and pay back over time, with interest. Even though that's how most people define the word mortgage, it isn't technically a loan at all. It's a document you give your lender so it can prove that it has a legal financial interest in your property. In other words, a mortgage secures a loan by creating a lien, or a financial claim, on your property. You're the property's legal owner, but you can't sell it to anyone else until you repay the loan in full, releasing the lien.