A mortgage loan refers to a home financing loan agreement that gives you money to buy a home. You borrow money to purchase the house and agree to pay back the loan in monthly installments. If you fail to pay back your loan, the mortgage lender has the right to repossess your home. This loan type can also be used to refinance a home, with the same terms and conditions for failure to repay the loan. Because most people do not have the money on hand to purchase a property outright, this is the most common way most people finance their home’s purchase.

A home loan refers to a loan used to purchase a residential home. It is the most common way for someone to purchase personal property with a lived-in residence. Home loans are a type of mortgage loan.

Mortgage loans can technically be used to purchase any type of property. While most people think of mortgages in reference to residential home purchases, they are also often used by individuals or corporations to purchase industrial properties, rental properties, hotels, and other pieces of real estate.

Mortgage loans are generally considered to be a wise financial investment. While debt is generally not encouraged, mortgage debt is looked upon more favorably by financial institutions. They allow the average person to invest in real estate without spending the upfront purchase price. Because they are secured by the collateral of the home or property itself, interest rates are usually relatively low. They can also be a great long-term financial choice for those who are currently renting.

Fixed Rate Mortgages and Adjustable Rate Mortgages are the two most common mortgage options available to home buyers. While you may want to start house hunting right away, it is also important to determine the type of loan that suits your needs.

There are several common types of mortgages available including fixed-rate mortgages, adjustable-rate mortgages, government-backed mortgages like FHA and VA loans, jumbo mortgages for luxury homes, and specialty mortgages like interest-only or balloon payment mortgages.

Fixed-Rate Mortgages
• Set interest rate for life of loan
• Payments do not change, easy budgeting
• Protected from payment increases if rates rise
• 30, 20, 15 year terms
• Total interest paid depends on mortgage term

Adjustable Rate Mortgages (ARMs)
• Variable interest rate changes over time
• Initial rate below market, rises over time
• Set period with constant rate, then adjusts
• Allows larger loan amount qualification
• Benefit from lower rates/payments without refinancing

You should consider which mortgage payment aligns with your monthly budget, length of time you intend to live in the property and current interest rates are among the factors to be considered.

The mortgage approval process timeline can vary, but it generally takes several weeks to be finalized. To be conservative, budget approximately 6 to 8 weeks for the entire process. Your mortgage loan may be approved within a couple of weeks, but it is better to allow yourself plenty of time to complete the process.