A mortgage is a fundamental financial tool that enables individuals to purchase property, typically a home, without paying the full price upfront. Instead, the borrower secures a loan from a lender, usually a bank or a mortgage company, to cover the property's cost. The borrower then repays this loan over an agreed-upon period, known as the mortgage tenure, with added interest.

Understanding Mortgages
A mortgage involves several key components:

1. Principal: The principal is the loan amount borrowed to purchase the property.
2. Interest: The cost of borrowing the principal. It's usually expressed as an annual percentage rate (APR).
3. Term: The duration over which the borrower agrees to repay the loan. Common terms are 15, 20, or 30 years.
4. Down Payment: An upfront payment made by the borrower, typically a percentage of the property's purchase price.
5. Amortization: The process of gradually paying off the loan through regular payments over the term.

Types of Mortgages
Mortgages come in various forms, each catering to different borrower needs:

• Fixed-Rate Mortgage: The interest rate remains constant throughout the term, providing predictable monthly payments.
• Adjustable-Rate Mortgage (ARM): The interest rate may fluctuate after an initial fixed period, which can affect monthly payments.
• FHA Loans: Insured by the Federal Housing Administration, these loans cater to borrowers with lower credit scores and smaller down payments.
• VA Loans: Available to veterans and active-duty military personnel, these loans often require no down payment.

Importance of Mortgages
Mortgages play a crucial role in the housing market, enabling homeownership for millions who might not have the means to pay upfront. They also represent a significant financial commitment, making it essential for borrowers to understand the terms and conditions thoroughly.