Mortgage loans have been defined as those loans that are offered by financial institutions
to aid home owners towards acquiring a home they can call their own. Sometimes the loan is used to do home repairs to improve the look of the house. As such, the borrower must be able to demonstrate that he is the real owner of the home.
The home for which the loan is being acquired is used as security. The more the home is worth, the higher the amount of money that one is likely to be given. The interest rate chargeable on the mortgage loan varies from one lending institution to another depending on the lending terms and conditions. Most firms have a lending period of up to 30 years within which one is supposed to have repaid the entire mortgage and the interest accrued.
As a borrower, some of the basic terms that you need to familiarize with as you seek a mortgage loan include the term property. This refers to the physical asset, home in this case, that is being financed through the mortgage. However, note that varying from state to state, not all forms of property qualify to be financed through mortgage.
The other term is principal, which basically refers to the amount of money that the lender will extend to the borrower as mortgage. The principal may or may not include other costs like application fees and the processing fee. The interest is the amount payable above the principal amount. It is charged as a gratitude fee' for being allowed to use the lenders money.