A mortgage is an agreement between you and a lender that gives the lender the right to take your property if you fail to repay the money you’ve borrowed plus interest.
Mortgage loans are used to buy a home or to borrow money against the value of a home you already own.
Seven things to look for in a mortgage
- The size of the loan
- The interest rate and any associated points
- The closing costs of the loan, including the lender’s fees
- The Annual Percentage Rate (APR)
- The type of interest rate and whether it can change (is it fixed or adjustable?)
- The loan term, or how long you have to repay the loan
- Whether the loan has other risky features, such as a pre-payment penalty, a balloon clause, an interest-only feature, or negative amortization