What is a mortgage?

Mortgages are what enable most people to become homeowners. A mortgage is a loan you obtain from a lender using the property as collateral. In exchange for loaning you the money, the lender will have a lien against your property. This protects the lender in the event you don’t repay your loan. You make payments each month towards the loan. Once the loan is paid in full, the mortgage lender releases its interest in your property, and you own it “free and clear”.

Why might I need a mortgage?

Unless you have enough cash, you’ll need to obtain a mortgage loan to purchase a property. It is possible to obtain a mortgage to purchase nearly any type of property. Most homeowners take out a mortgage loan to pay for their primary residence. It is also common to obtain mortgages to pay for a vacation residence, investment property and rental real estate. Work with a qualified loan officer to help you obtain a mortgage loan that’s right for you.

Why should I manage my mortgage?

Your mortgage payment will likely be one of your largest monthly expenses. Before you purchase any property, you need to know the amount of the monthly payment. Failing to make your payments on time can negatively affect your credit score. Your lender can even take your home in a foreclosure action. With so much on the line, it makes sense to properly manage your mortgage.

How do I manage my mortgage?

The most important part of managing mortgages is making the payments on time! Most mortgage companies are flexible with the due date. Plus, there is usually a grace period in which you can make your payment. In order to make your payments on time, it’s a good idea to set up your mortgage payments to be deducted automatically from your bank account. Banks will charge you a late fee if the payment is not received by the due date each month (after the applicable grace period).

It’s a good idea to check your principal balance at least one per year. The principal is the amount you owe on the loan, excluding the interest. In the beginning, more of your monthly payment goes to interest. But, as you pay down the loan over time, more of your monthly payment will go towards the principal. 

If your mortgage payment is higher than you’d like it to be, consider ways to lower your mortgage interest rate.

Discover professionals in our network

Finding a professional in your area to help you improve your personal finances is another excellent step on your journey to create wealth and achieve financial stability. A professional, such as a loan officer, has first-hand knowledge and experience with mortgages. These professionals can answer any questions that you may have regarding your unique circumstances and help you customize a strategy that will best fit your financial needs.

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Looking to learn more about mortgages? Immerse yourself in our insights that focus in more detail on how to better understand, manage and improve your personal finances.