Mortgage

Dictionary Says

Definition of 'Mortgage'

A debt instrument that is secured by the collateral of specified real estate property and that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses to make large purchases of real estate without paying the entire value of the purchase up front.

Mortgages are also known as "liens against property" or "claims on property".
Investopedia Says

Investopedia explains 'Mortgage'

In a residential mortgage, a home buyer pledges his or her house to the bank. The bank has a claim on the house should the home buyer default on paying the mortgage. In the case of a foreclosure, the bank may evict the home's tenants and sell the house, using the income from the sale to clear the mortgage debt.

Related Definitions

  • Adjustable-Rate Mortgage - ARM

    A type of mortgage in which the interest rate paid on the outstanding balance varies according to a specific benchmark. The initial interest rate is normally fixed for a period of time ...
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  • Paydown

    This occurs when the amount a company or government repays in debt exceeds the amount they currently borrow. A Paydown takes place when a company reissues unpaid debt for less than the ...
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  • Conventional Mortgage

    A type of mortgage in which the underlying terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac. About 35-50% of mortgages, depending on market conditions and ...
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    • Fannie Mae - Federal National Mortgage Association - FNMA

      A government-sponsored enterprise (GSE) that was created in 1938 to expand the flow of mortgage money by creating a secondary mortgage market. Fannie Mae is a publicly traded company ...
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    • Graduated Payment Mortgage

      A type of fixed-rate mortgage in which the payment increases gradually from an initial low base level to a desired, final level. Typically, the payments will grow 7-12% annually from ...
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    • Guaranteed Investment (Interest) Certificate - GIC

      A deposit investment security sold by Canadian banks and trust companies. They are often bought for retirement plans because they provide a low-risk fixed rate of return. The principal ...
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    • Bank-Owned Property

      Properties that are taken into a bank's inventory, after a foreclosure sale. Bank-owned property is aquired by a financial institution when a homeowner does not make their mortgage ...
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    • Owner-Occupant

      A resident of a property who also holds the title to that property. In contrast, an absentee owner holds title to the property but does not live there. A landlord is a type of absentee ...
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    • Lien

      When a creditor or bank has the right to sell the mortgaged or collateral property of those who fail to meet the obligations of a loan contract.
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    • Assumable Mortgage

      A type of financing arrangement in which the outstanding mortgage and its terms can be transferred from the current owner to a buyer. By assuming the previous owner's remaining debt, the ...
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    • Mortgage Broker

      An intermediary who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgages. A mortgage broker gathers paperwork from a borrower, ...
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    • Partial Release

      A mortgage provision allowing some of the pledged collateral to be released from the mortgage contract if certain conditions are met.
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    • Variable Interest Rate

      An interest rate on a loan or security that fluctuates over time because it is based on an underlying benchmark interest rate or index that changes periodically. The obvious advantage of ...
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