What is a mortgage?

A mortgage is a type of loan that is used to purchase real estate such as a house. It is a binding agreement between a borrower and a lender that allows the borrower to use the property as collateral, meaning if the borrower stops making payments, the lender can take possession of the house. In Virginia, mortgages are typically recorded with the local circuit court. When an individual takes out a mortgage, they must make regular payments over a period of time to pay off the loan. The amount of time an individual has to pay off their mortgage is called the amortization period. At the end of the amortization period, the remaining balance of the loan is usually paid off in a lump sum. Mortgages are typically secured loans, meaning that the lender can take possession of the collateral if the borrower fails to make payments. As such, mortgages usually come with lower interest rates than other types of loans. Additionally, state and federal laws in Virginia provide certain protections to mortgage borrowers to protect them from unfair or predatory practices. When purchasing real estate, it is important to research all of the potential mortgage options and choose the one that fits your needs and budget. It is also important to understand the terms of the loan and the potential risks associated with missing payments. Taking out a mortgage is a big responsibility and should be handled with care.

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