Mortgage Loans

A mortgage loan is a loan secured by real property through the use of a document which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan. However, the word mortgage alone, in everyday usage, is most often used to mean mortgage loan. A home buyer or builder can obtain financing (a loan) either to purchase or secure against the property from a financial institution, such as a bank, either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably.


There are various ways lenders protect themselves from borrowers who do not repay their debts, otherwise known as defaulting on a loan.
One of the ways that lenders protect themselves is by requiring mortgage insurance. Mortgage Insurance is also commonly referred to as Private Mortgage Insurance or PMI. If you make a down payment of less that 20 percent, you will be required to pay for mortgage insurance. Saving enough money for a down payment of 20 percent on a house can take some borrowers' years to accomplish. For a $200,000 home, that is $40,000! So instead of requiring a down payment of 20 percent in order for a home buyer to get a mortgage, some lenders will establish a minimum down payment and then require mortgage insurance. The cost of mortgage insurance is usually added into your monthly mortgage payments, but you may have the option of paying it upfront at the loan closing.