A house mortgage is a loan that a borrower takes out to purchase property. The loan is secured by the property itself, meaning that if the borrower defaults on the loan, the lender can foreclose on the home and sell it to recoup their losses. House mortgages typically have much lower interest rates than other types of loans, making them an attractive option for borrowers looking to finance a home purchase.
The vast majority of house mortgages are fixed-rate loans, meaning that the interest rate stays constant for the duration of the loan term. This offers borrowers predictability and stability, as they know exactly how much their monthly payments will be. Adjustable-rate mortgages (ARMs) are also available, but these come with more risk since the interest rate can fluctuate over time.
In addition to principal and interest, most house mortgages also require borrowers to pay escrowed funds into an account each month. These funds go towards things like taxes and insurance premiums, which helps protect both the borrower and lender in case something goes wrong with the property. Some lenders may also require borrowers to maintain a certain amount of cash reserves in order to qualify for a loan.