Mortgage. It’s a word we have heard for most of our lives, but do we really know what it means. From the commercials on television, the refinancing ads in the newspaper, to the conversations we heard our parents have but never really understood – we have been inundated with information on mortgages throughout our lives.

But when it comes down to it, most of us need help figuring out the ins and outs of obtaining a mortgage, as well as, figuring out, what the heck it really does for us. We hear the term mortgage everyday, on television, in ads, on the side of buses, even in the Yellow Pages.

In the simplest terms, a mortgage is the amount of money we borrow from the bank or other financial institution to finance the house we want to by for a set period of time at a cost set forth by the terms of the mortgage contract. A mortgage acts as a good-faith note that you will pay back the money given to you to purchase a home on at least a monthly basis until the terms of the contract are fulfilled. Most simply, it’s the agreement that you will pay for your home for a designated amount of time.

Most times a loan is taken out for anywhere from 15- to 30-years, but generally it is either or. Not only do you pay back the principal, but you pay back the interest and the taxes that accrue on the borrowed amount of money. You can choose to roll these costs over into your monthly payments or to pay them prior to securing your loan.

Once you understand the basic premise of a mortgage you are on your way to having the home you dreamed at a price you can afford.

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