1. Mortgage Basics: Introduction
  2. Mortgage Basics: Fixed-Rate Mortgages
  3. Mortgage Basics: Variable-Rate Mortgages
  4. Mortgage Basics: Costs
  5. Mortgage Basics: The Amortization Schedule
  6. Mortgage Basics: Loan Eligibility
  7. Mortgage Basics: The Big Picture
  8. Mortgage Basics: How To Get A Mortgage
  9. Mortgage Basics: Conclusion

By Lisa Smith

A home of your own. That little phrase captures so much emotion, and so many hopes and dreams. It's a place to express yourself and somewhere you can do what you want, when you want. You can decorate, landscape and shape your surroundings with no limits other than your imagination and your budget. Quite simply, for many people, homeownership represents freedom.

Owning a home is also an opportunity to put down roots and get involved in the community. Buying a home is your chance to leave behind the transient lifestyle and rent increases of the apartment dweller, exchanging something temporary that belongs to someone else for something permanent that belongs to you. It's a powerful emotional pull that encourages millions of people to make the move from renting to buying. (For more on this, read To Rent Or Buy? The Financial Issues - Part 1 and Part 2.)

Beyond all of the emotion invested in homeownership, owning a home can also be a powerful financial tool. Even if you don't have enough money left at the end of the month to invest in traditional wealth-building vehicles like stocks and bonds, simply paying for the place where you live can help you amass a substantial net worth. In fact, used properly, homeownership is often an individual's single largest source of wealth. Money paid into a house and not taken back out generally continues to grow over time as the value of the property appreciates. It is possible that in 30 years, that $100,000 house may be worth double or triple what you paid for it.

While buying home can give you a great place to live and a way to build wealth, all of these hopes, dreams and financial benefits come with a cost. For most people, the bulk of that cost is wrapped up in a mortgage.

So what is a mortgage? If you take a look at the mortgage calculator below, you'll see examples of lenders and the various types of mortgages. However, at its most basic, a mortgage is a loan used to purchase a house.

This definition is simple enough to capture the essence of the issue, but it barely scratches the surface of the complex issues that underlie this topic.
In this tutorial, we'll provide the foundation you need to research and find a mortgage. We'll start by explaining the basic types of popular mortgages available in the marketplace, and then we'll review the costs associated with a mortgage and the process that you must go through in order to secure one. We'll also review the pros and cons of homeownership and highlight some tips for positioning your finances in a way that will help you qualify for a favorable interest rate such as using a mortgage calculator like the one above. (For a one-stop shop on subprime mortgages and the subprime meltdown, check out the Subprime Mortgages Feature.)


Mortgage Basics: Fixed-Rate Mortgages
Related Articles
  1. Personal Finance

    Finding the Best Mortgage Rates in 2017

    As home-buying technology has progressed, the process of finding the best mortgages rates can all be done online. Here's how:
  2. Personal Finance

    How to Use a Mortgage Calculator to Save Time and Money

    Calculate your monthly mortgage payment using the Investopedia's free calculator.
  3. Personal Finance

    5 Reasons To Save For A Big Mortgage Down Payment

    You may be anxious to buy a home, but taking time to save a large down payment has numerous advantages.
  4. Personal Finance

    Shopping for a Mortgage in 2017? Use This Tool First

    As home-buying technology has progressed, the process of finding the best mortgages rates for 2017 can all be done online.
  5. Personal Finance

    The Pros and Cons of Paying Off a Mortgage

    Deciding whether or not it's a good idea to pay off your mortgage depends on several factors.
  6. Personal Finance

    Benefits Of Paying Off Your Mortgage

    Paying off your mortgage in a reasonable amount of time can result in financial security and freedom.
  7. Personal Finance

    5 Things You Shouldn't Tell Your Mortgage Broker

    Applying for a mortgage can be a strenuous process. Here are five things to avoid doing when meeting with your mortgage broker.
  8. Investing

    Top Tips For First-Time Home Buyers

    Follow this step-by-step guide to make your homeownership dreams a reality.
  9. Financial Advisor

    6 Mistakes to Avoid When Buying a Home

    By avoiding these six pitfalls when purchasing a home, you will be in a much better position to make an educated choice before signing on the dotted line.
  10. Investing

    Measuring The Benefits Of Home Ownership

    Price appreciation is the biggest factor, but it's not the only thing to consider.
Frequently Asked Questions
  1. What is the history of the S&P 500?

    Discover the history of the S&P 500, which sophisticated market participants consider to be the best index to understand ...
  2. What is the formula for calculating weighted average cost of capital (WACC) in Excel?

    Learn about the weighted average cost of capital (WACC) formula and how it is used to estimate the average cost of raising ...
  3. Where do most fund managers get their market information?

    Many fund managers, whether they manage a mutual fund, trust fund, pension or hedge fund, have access to resources that the ...
  4. What's the difference between short-term investments and marketable securities?

    Understand the difference between short-term investments and marketable equity securities, and learn the importance of short-term ...
Trading Center