A mortgage is one of the most fundamental concepts in personal finance.
When you think about it, to buy a home is prohibitively expensive. I mean, who walks around around with $400,000 plus to spend in their bank accounts! Bill Gates aside, how can so many people live in these homes? The answer is a mortgage.
A mortgage is basically a loan by a bank to an individual. But it’s not an ordinary loan; with a mortgage, the bank can use the house as “collateral”. If you can’t make a payment, the bank can seize, or take ownership of your home. As a result they give great rates, and loan large sums of money.