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A rite of passage in the life of any young person is buying a first home. Unfortunately, most young people can’t afford to buy a house outright, so they must take a mortgage to get on the property ladder. All too often, though, first time buyers go into mortgage agreements without understanding home mortgage terms and other mortgage basics. In this article, we’ll briefly discuss a few things you need to know before taking the plunge and buying your first home.

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A mortgage is, quite simply, a loan with which you can purchase real estate. A lender will allow you to borrow an amount of money on the understanding that you will repay it, with interest, over a set period of time. As the amounts involved in the average mortgage are so large they are usually repaid over terms of fifteen to thirty years usually in monthly installments.

In order to protect their investment, a lender will require that your house be used as collateral on the mortgage. Essentially this means that if you fail to make the required repayments the lender can repossess your home, resulting in home mortgage closing. Clearly, then, the most important factor in choosing a mortgage must be ensuring that you can realistically make the required repayments.

While there are several different types of mortgage, these basics usually remain the same. However, before making any decisions you should always research your options. Even though one mortgage may look basically the same as another, the amount you will eventually repay could vary greatly.

Buying a home will be the single most expensive purchase you ever make. Only by understanding the mortgage basics you can ensure that you make the right choice.