Real Estate and Big Purchases — How home loans are structured and what drives the cost.
A mortgage is a long term loan to buy a home, with the home itself as collateral. Miss enough payments and the lender can foreclose.
Down payment: The cash you pay upfront. A larger one means a smaller loan and often better terms, and 20 percent or more can avoid PMI.
A fixed rate mortgage keeps the same rate for the loan's life. An adjustable rate can change after an initial period, so payments may rise or fall.
Early payments go mostly to interest because the balance is largest at the start. Later payments shift toward principal.
A higher credit score earns a lower mortgage rate, which over decades can save tens of thousands of dollars.
11 practice questions with explanations. Free, and no account is needed to start.