How Mortgages Work?
Mortgages let people and businesses buy property/assets without having to pay the full price all at once. The person who takes out the loan pays it back with interest over a certain number of years, or until they own the land outright. Full amortization is what most standard mortgages do. This means that the amount of the monthly payment will stay the same, but over the life of the loan, different amounts of capital and interest will be paid with each payment. Most mortgages have terms of 15 or 30 years. They are also called Claims on Property or Liens Against Property. The lender can take back the property if the debtor stops paying the debt. For instance, when a person buys a house and promises it to their lender, the lender has a claim on the property. In the event that the buyer doesn’t pay, this protects the lender’s interest in the property. In the event of a foreclosure, the lender may kick the people out, sell the house, and use the proceeds from the sale for paying off the mortgage.