Mortgage: At its core, a mortgage is a loan designed to facilitate the purchase of a home. It establishes a legal agreement between the borrower and the lender, utilizing the property itself as collateral until the loan is fully repaid.

Principal: The principal is the original sum of money borrowed, excluding interest. This amount serves as the baseline upon which interest calculations are applied.

Interest Rate: A fundamental factor in any mortgage, the interest rate is the percentage the lender charges for the privilege of borrowing. It profoundly impacts the total amount repaid over the life of the loan.

Amortization: Amortization is the systematic repayment of a mortgage over time through regular monthly payments. These payments cover both principal and interest, with a larger portion allocated to interest in the initial years.

Down Payment: The down payment represents the initial payment made by the buyer when acquiring a home, typically calculated as a percentage of the total property value.

Term: The mortgage term signifies the duration during which the interest rate and associated conditions are fixed. Common terms include 15, 20, or 30 years.

Closing Costs: Often underestimated, closing costs encompass the fees and expenses incurred to finalize a mortgage transaction. Examples include appraisal fees, title insurance, and legal costs.

Escrow: An escrow account is established to hold funds for property taxes and homeowners insurance. The lender manages this account, ensuring timely payment of these obligations on behalf of the borrower.

Fixed-rate Mortgage: This type of mortgage maintains a constant interest rate throughout the entire loan term, providing stability and predictability in monthly payments.

Adjustable-rate Mortgage (ARM): In contrast, an ARM features an interest rate that may fluctuate based on changes in a designated financial index, potentially leading to varying monthly payments.