Mortgage FAQs What does mortgage mean? A mortgage refers to a loan that is used to purchase a home. Mortgage payments are typically made monthly and include five main components: down payment, principal, interest rate, closing costs, and insurance. Why do I need a mortgage? You need to obtain a mortgage if you cannot pay the total price of a home with cash. In some instances, it makes sense to have a mortgage on your property despite having the funds to pay it off. For example, investors may mortgage houses to free up capital for other ventures. Can anyone get a mortgage? Specific eligibility requirements must be met to qualify for the loan. Therefore, a person who obtains a mortgage will generally have a consistent and reliable income and a good credit score. How many mortgages can I have? Technically, there is no limit to the number of mortgages a person may hold. When you demonstrate sufficient wealth or collateral, there are minimal restrictions on the number of mortgages you can hold at once. Nonetheless, certain qualifications may limit your total. What are the risks associated with a mortgage? By obtaining a mortgage, you agree to repay the principal, plus interest, within a specified time frame. This means you might have to pay significantly more than you borrowed. Furthermore, if you default on your payments, your lender may sell your home to recoup their losses. About the Author True Tamplin, BSc, CEPF® Facebook Linkedin Instagram Twitter Youtube True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists. True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics. To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.