Whats a morgage?

[catycatcat4]

Stupid question but i'm only 16
Whats a morgage all i know is yall adults hate it and it has somthing to do with your house.

 

[MerMom60_94]

A mortgage is a loan that is taken out to buy a house. Typically, a mortgage is for 30 years, but there are options for shorter durations (i.e. 15 years). Hope this helps without getting into too much detail.

 

[robertgp124]

Wikipedia used to not be so good. Lately, I've really started using it quite a bit more.

Here's the article on mortgages from wikipedia

http://en.wikipedia.org/wiki/Mortgage

Hope it helps you out.

 

[luke]

It's what stops me being in Florida more often...

 

[It'sWDW4me]

OK, you want to buy a house but you really don't have $200,000 or so lying around (not too many people do ). So you go to a bank, credit union, or mortgage lender for a loan. Well, since that's a ton of money to just lend somebody - what if you don't pay the loan back? - you give them (this is what most people don't realize) a mortgage on your house or property. A mortgage is simply an agreement that, if you don't pay the loan back, the bank/credit union/mortgage lender can then take the house (forclosure). You would need to move out. The bank would sell the house to pay off your loan. They usually don't want to do this and so it usually takes like not paying for 6 months until the bank gets to the point of forclosure.

When you take the loan out, you decide how long you need to pay the loan back - 10 years, 15, 20, 30, even 40 year mortgages are out there.

So this is why adults can get headaches over mortgages. That's one bill that has to get paid every month so your family has someplace to live.

This is kind of a nutshell. There's more involved - escrow (additional money you need to pay each month for Real Estate and School taxes); interest rates; blah, blah.

Hope this helps.

 

[chillcoupons]

A mortgage is the way you get to pay three times the purchase price of your house before you actually own it.

 

[FireDancer]

A mortgage is the way you get to pay three times the purchase price of your house before you actually own it.

That's pretty much the summary right there. After this month's payment I believe I own one closet and the laundry room outright. The rest is still the bank's.

 

[mainegal]

These are some really good explanations and I hope the help Sierra.

I know that even though you pay every month, the bank still owns the house (of most of it) for a long time. But I never really thought of it as the mostgage is what you give the bank.

People sometimes give me a "hard time" because I rent, telling me that I am "throwing my money away". I am not. In exchage for rent, I have a place to live for a lower monthly cost than a house mortgage.
At the end of thirty years, homeowners will have a house through forced savings. I will have a money stashed in savings and investment accounts through disciplined savings.
I have run a number of financial calculators, we come out pretty even.

 

[WDWtraveler27]

Stupid question but i'm only 16
Whats a morgage all i know is yall adults hate it and it has somthing to do with your house.

I never understood it either...monopoly confused me xD

 

[wishspirit]

These are some really good explanations and I hope the help Sierra.

I know that even though you pay every month, the bank still owns the house (of most of it) for a long time. But I never really thought of it as the mostgage is what you give the bank.

People sometimes give me a "hard time" because I rent, telling me that I am "throwing my money away". I am not. In exchage for rent, I have a place to live for a lower monthly cost than a house mortgage.
At the end of thirty years, homeowners will have a house through forced savings. I will have a money stashed in savings and investment accounts through disciplined savings.
I have run a number of financial calculators, we come out pretty even.

Plus when something goes wrong, you have the landlord to come deal with it!

I would always own my own home, but mainly because the rental prices in the UK are so crazy. Houses are at a premium, so people think they can charge what they like, and they pretty much do.

Just got to build up that deposit!

 

[dalt01]

its something you do so you can mow grass.

 

[maroo]

A mortgage is the way you get to pay three times the purchase price of your house before you actually own it.

 

[catycatcat4]

So what happens when people take out another morgate ?

 

[TSWJan78]

So say you own a house that is worth $100,000 and you have paid off some of it so you only owe $50,000 you can do 2 things... You can take out a second morgage or another loan to do things like pay off bills, pay off a car or fix up your house and that is a shorter time frame OR you can Refinance your house which is taking out another loan that pays off the first loan but may be a lower intrest rate so it is a lower payment. Does that make sense??

 

[dmwang9]

People sometimes give me a "hard time" because I rent, telling me that I am "throwing my money away". I am not. In exchage for rent, I have a place to live for a lower monthly cost than a house mortgage.

When I moved to San Francisco six years ago, just out of curiosity I looked into the housing market and immediately realized that in order to own a home here in the Bay Area, I'd either have to live in the suburbs (when the whole reason I had moved here in the first place was to be in the city) or be in debt until 20 years after I retired. Neither one was very appealing to me. I've come to accept that paying a monthly rent is part of the cost of living in a city like San Francisco -- plus, as mainegal said, I'm able to save more on my own than if I had a mortgage.

 

[DisneyKevin]

The idea of buy vs. renting is that you will eventually pay off your mortgage (loan) and own something that will hopefully appreciate in value.

I bought the home that we live in in 2000. At the end of 2006 and the begining of 2007....the house we live in had tripled in value.

We all know what happene after that. Our home is back to being worth what it was in 2002.

Right now, in most of FL, you can own for less than you can rent.

Rents are high due to the fact than lenders are being tight with mortgages and people nee a place to live.

In addition, homeowners get tax deductions that renters do not get.

 

[Halbleib1]

So say you own a house that is worth $100,000 and you have paid off some of it so you only owe $50,000 you can do 2 things... You can take out a second morgage or another loan to do things like pay off bills, pay off a car or fix up your house and that is a shorter time frame OR you can Refinance your house which is taking out another loan that pays off the first loan but may be a lower intrest rate so it is a lower payment. Does that make sense??

Or if you do not have a down payment to begin with you might have a 2nd mortgage at a higher interest rate in the amount of what the down payment would have been. For example on a 100,000 home you would typically have to have 20,000 down but if you do not have 20,000 you could borrow it from the bank in the form of a 2nd mortgage. You would still have the first mortgage for the 100,000 as well. This is called 100% financing which is not done too much today with the housing problems that took place from many people doing this and abusing it.

 

[Halbleib1]

The idea of buy vs. renting is that you will eventually pay off your mortgage (loan) and own something that will hopefully appreciate in value.

I bought the home that we live in in 2000. At the end of 2006 and the begining of 2007....the house we live in had tripled in value.

We all know what happene after that. Our home is back to being worth what it was in 2002.

Right now, in most of FL, you can own for less than you can rent.

Rents are high due to the fact than lenders are being tight with mortgages and people nee a place to live.

In addition, homeowners get tax deductions that renters do not get.

So true here where I live you can rent for the same price I pay for my mortgage. And rent goes up every year as well. At least with a mortgage if it is a fixed rate it can not go up. And the tax deductions are great as well. Although the property tax kills you. Also the great thing about owning your own home is that you can do whatever you want to with it and you do not have to answer to a landlord. We rented for 6 years before buying our home and we were not allowed to paint, you had to keep the noise down much more than in your own home because the walls were so thin. Some landlords are really annoying and send around newsletters filled with new rules etc. For us owning is so much more freeing than renting ever could be. Just depends on your needs/wants and lifestyle.

 

[kaligal]

It's a loan. People go to the bank and the bank lends them the money to buy the house. Isn't that nice of them? The bank charges you a fee for this nice thing they're doing for you and you have to pay that, too.

You pay it all over a period of time, X amount of dollars a month. If you don't pay it back, the bank gets to take your house back to sell so they can get back the money they lost giving it away to you.

People don't really hate their mortgages. They really like them or they wouldn't go ask for them in the first place. They just like to complain.

Not all adults have them. Just people who want houses but don't have enough money to buy them.

 

[mainegal]

One thing about a mortgage - by the time you actually own the house, you may have paid double or triple the cost of the hosue. That is the interest the bank collects while loaning you money.