The vocabulary and mechanics of a home loan.
Before comparing loan programs, it helps to understand the core structure of a mortgage — what your payment is made of, how amortization works, and how lenders make decisions.
Direct answer
A mortgage is a secured loan used to purchase or refinance real estate, repaid over a fixed term with monthly payments covering principal, interest, taxes, and insurance.
Key takeaways
- 01
Monthly payments cover principal, interest, property taxes, and insurance (PITI).
- 02
Amortization front-loads interest; equity builds slowly at first, then accelerates.
- 03
Rate, term, and program type all affect long-term cost.
What makes up a payment?
Principal, interest, taxes, insurance, and — where applicable — mortgage insurance and HOA dues.
Fixed vs adjustable rates
Fixed rates stay constant for the entire term. Adjustable rates start lower but can change on a defined schedule after an initial period.
How lenders decide
Underwriting reviews income, employment, assets, credit, debt-to-income ratio, and the property itself.
Related calculators
Related loan programs
Frequently asked
What's the difference between interest rate and APR?
The interest rate is applied to your loan balance. APR bundles rate plus certain fees, giving a broader cost view.
How does amortization work?
Each payment is split between interest and principal on a schedule. Early payments are mostly interest; later payments are mostly principal.
Can I pay off my mortgage early?
Usually yes. Extra principal payments reduce total interest and shorten the term. Check your note for any prepayment terms.
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