A mortgage is a long-term loan, typically spread over 15 or 30 years, used to purchase a
home using the property as collateral. The lender will hold the title to the property or a
lien on the title until the loan and interest have been repaid. Home loans are available
from several types of lenders including thrift institutions, banks, mortgage companies and
The most common types of mortgage loans are fixed-rate and adjustable-rate loans.
However, there is a broad and sophisticated array of mortgage products from which to
choose including a stated-income loan, bridge loan, zero-down loan or FHA loan. Each
program specializes in meeting specific borrower needs.
Depending on the loan type, during the mortgage loan application process, the lender will
verify your income and debt obligations. The lender will want proof of your financial
status and may verify your income and other assets by requesting pay stubs, tax returns,
bank and investment account statements, and any other documentation that verifies your
financial situation. The lender also will evaluate your credit history. This will help
determine your debt-to-income ratio and buying power.
Lenders typically require the borrower to repay the loan via monthly payments, which are
comprised of principle and interest, and in some cases property taxes and homeowners
insurance. The total cost of a mortgage is determined by the loan amount, its
amortization period (the term over which the loan is spread), and the interest rate paid on