1. A mortgage is a loan used to purchase a property.
1. Once the loan is fully paid off, the borrower owns the property outright.
1. As the borrower makes payments, the loan balance decreases, and the borrower builds equity in the property.
1. The interest is the cost of borrowing the money, and the principal is the amount borrowed.
1. The borrower makes monthly payments to the lender, which include both the principal and interest on the loan.
1. The lender disburses the funds for the loan, and the borrower uses them to purchase the property.
1. The borrower makes a down payment, which is a percentage of the purchase price of the property.
1. Once the lender approves the loan, the borrower and lender sign a mortgage agreement, outlining the terms of the loan and the borrower's responsibilities.
1. The lender also orders an appraisal of the property to determine its value and ensure that it is worth at least as much as the loan being requested.
1. The lender conducts a credit check and evaluates the borrower's financial situation to determine their ability to repay the loan.
1. The property being purchased serves as collateral for the loan.
1. The borrower makes monthly payments to the lender, which go toward paying off the loan over a specified period of time, typically 15 or 30 years.