Definition: In finance, a mortgage loan involves the lending of money by one person to another for the purchase or renovation of property (usually a home) in return for the right to live there forever, and to use that property as collateral (a thing you might be able to sell). The terms are set up so both parties agree on terms. A mortgage is usually paid back through monthly payments, and it's called a "mortgage payment" because it's like how you make money by paying rent. If you pay off your mortgage earlier than planned, the lender may charge you extra interest to keep the balance at the same rate as long as you continue making your monthly payments. There are many different types of mortgages, but one type is called a "fixed-rate mortgage" (FRM) because it's set by the lender and doesn't change throughout the life of the loan. The other types are called adjustable-rate mortgages (ARMs) and balloon mortgages (BMFs). An ARM has a fixed rate for a specific period (like 15 years), while an BMF has the option to change the interest rate from time to time. A balloon mortgage is similar to a BMF, but with one large payment at the end of the loan. Mortgage deals can be very complicated, so it's important that you do your research and understand all the terms before signing anything. If you're unsure about something, you may want to talk to a financial advisor who can help you understand the mortgage deal better.
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