Momentum Realty Group
Carolyn Brown, Momentum Realty GroupPhone: (510) 882-3454
Email: [email protected]

What is the mortgage, anyway?

by Carolyn Brown 01/06/2025

For many, the concept of buying property seems completely unfamiliar - and paying for it might make you wonder, “what is ‘the mortgage,’ anyway?” If you’ve rented a house or apartment before, you’re familiar with monthly payments and extra fees for maintaining the property. But how is a mortgage different?

To help you gain a better understanding of what a mortgage actually is and how it works, here is a quick guide to the basics:

Mortgage basics

You can think of mortgages similar to car loans. You pay monthly repayments with fixed interest until you pay off the loan. 

Mortgage loans work because only few buyers have the money they need up front to make this kind of huge purchase. Instead of paying out-of-pocket, a mortgage helps you spread your purchase costs over several years, allowing you to buy homes at lower costs.

How are mortgages different from other loans?

Mortgage loans have interest rates and agreed upon repayment periods like any other loan. However, some important distinctions distinguish mortgage loans from other types of loans. 

A mortgage is a secured loan, which means it requires collateral - an asset the lender can seize if you default on the loan. In the case of mortgages, the property itself is collateral. 

An unsecured loan doesn’t require collateral, but may have higher interest rates or minimum qualifications to help the lender mitigate risk.

What goes into a mortgage payment?

You pay your mortgage payment monthly. Mortgage loans comprise four major costs: principal, interest, taxes and insurance. Principal is the actual amount of money you borrow, and interest is the percentage that goes back to the lender.  

Property taxes and insurance also factor into your monthly payment. Insurance could be either mortgage insurance or homeowners insurance, depending on which type you have.

Do I own my home when I have a mortgage?

Buying a home means you’re responsible for making decisions about the property, but a mortgage can make the concept of ownership confusing. However, the simple answer is yes, you do own your home as long as the terms of the mortgage are met.

Even knowing the basics about a mortgage loan, the process can seem daunting. However, this key information will help guide you through the process of becoming a homeowner.

About the Author
Author

Carolyn Brown

Hi, I'm Carolyn Brown and I have over 20+ years of real estate experience, serving Bay Area Counties: Alameda, Contra Costa, Solano, Sonoma, Sacramento, and Central Valley. I have a Master's Degree in Psychology and I work part-time for West Contra Costa Unified School District. This has afforded me the opportunity to connect with families and communities.  

I have always been a giver and compassionate about serving and helping others. A real estate career was never my goal but the passion I have to help others changed that and I would love to help you! Whether you're in the research phase at the beginning of your real estate search or you know exactly what you're looking for, you'll benefit from having a real estate professional by your side. I'd be honored to put my real estate experience to work for you.  

If credit is an issue, please don't let that discourage you. Having excellent credit is a work in progress but definitely workable. SmartCredit is an inexpensive App that will help you get on track and keep you on track. If you are proactive and willing, this can work for you. Sign up at: www.smartcredit.com/Chewzcarolyn.  

Also, I am an author. My book, "S.O.U.L Inspiration 4 Life Daily Word" is guaranteed to inspire you and encourage your soul. Giving up isn't an option, and if you desire to become a homeowner, then contact me and I'll show you how. Never let what you see, hinder what you believe. My wonderful book is available online at Amazon.com, Barnes and Noble, and Xulon.com. Let me know if you have any questions. Let's build a legacy together.  

Thanks for ChewzingCarolyn!!!