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What is a Mortgage?
A mortgage is a home loan from a financial institution—such as a bank or credit union—that is paid back with interest.

There are three basic components to a mortgage:

  • principal: the original loan amount
  • interest rate: the fee paid to borrow money
  • term: the length of time a mortgage is scheduled to be paid back

This is true for most any kind of loan, but especially home mortgages, refinanced mortgages and second mortgages.

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