What does it mean to mortgage your house? ?
can anyone explain this?
- Coffee DrinkerLv 71 month agoFavorite Answer
A mortgage is a type of bank loan where the borrower uses the money to buy a house and the house is collateral for the loan. This means the bank can foreclose (take ownership of the house) if the borrower doesn't make the payments.
Because the bank has the ability to take legal ownership of the house, the loans are very low-risk to the bank. This allows the bank to offer much lower interest rates than they would offer on higher-risk loans like unsecured personal loans or credit cards. The low rate allows people to get lower monthly payments and therefore buy more expensive houses while still having a monthly payment they can afford.
So to "mortgage a house" can mean any of the following things based on the context:
1. It could mean someone is buying a house and using a mortgage loan to pay the majority of the purchase price. This is common, in fact its the most common way people buy houses in most countries.
2. It could be describing someone who is "refinancing" a house - this means they already own a house and already have a mortgage loan, but they get a new loan and use the money from the new loan to pay off the old loan. They still have a mortgage but its a new mortgage possibly with a new bank. People do this for a variety of reasons, most commonly if interest rates have gone down they can get a lower rate and reduce their monthly payments.
3. In some rare situations, a person might have a house that is completely paid off - meaning they either paid off their mortgage loan or never had one. They could "mortgage" their home by taking out a loan from the bank with their house as collateral for the loan.
- Christin KLv 71 month ago
A mortgage is a loan that is specifically for buying property. If you have a mortgage, you have taken out a loan for the price of that property.
- SCATTY cLv 61 month ago
A mortgage is a loan specifically to buy a property, be that a house or a shop or whatever.
I think perhaps you mean REMORTGAGE your house. In which case it means switching your loan to a different lender usually to secure a better deal.
- SlickterpLv 71 month ago
A mortgage is a loan secured by the property.
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- ScottLv 71 month ago
A mortgage is simply a home loan. That's it.
- MaxiLv 71 month ago
A mortgage is a loan to purchase a property
- Anonymous1 month ago
Its how most people buy a house. With a mortgage. Because paying over 15-30 years makes it more affordable. Most are not able to pay cash.
- MurzyLv 71 month ago
Take an additional loan on the value of the house.
- A.J.Lv 71 month ago
Get a bank or other loan with home as collateral for that loan.
Fail to repay, and the home can be foreclosed upon.