Mortgage and Lending Terms FAQs What is a mortgage? A mortgage is a loan, usually from a bank or other financial institution, that is used to purchase real estate. The borrower receives the loan in one lump sum and then pays it back over time with regular payments, usually over fifteen to thirty years. The interest rate on a loan will determine how much the borrower has to pay each month. Is a mortgage the same as a loan? A mortgage is a type of loan that is secured by real property. If a borrower defaults, the property is foreclosed. All mortgages are loans, but not all loans are mortgages. What are the qualification requirements to get a mortgage? Lenders look at the four Cs of credit when assessing a borrower’s eligibility: capacity (ability to repay), collateral (value of the property used as security), capital (available funds to contribute towards the down payment and closing costs), and credit (factors such as credit score and employment history). How long does it take to close on a mortgage? It varies depending on the complexity of the loan and other external factors. Generally, closing on a mortgage can take anywhere from 30 to 45 days. During this time, lenders will collect information about your income and credit history, verify assets and employment, and appraise the property you want to purchase. Then you will receive your Closing Disclosure, showing your estimated closing costs. Once you sign this document and it is delivered to the title company, you are ready for closing. Can anybody get a mortgage? Generally speaking, anyone with a stable source of income and a good credit score can qualify for a mortgage. Most lenders will typically look at your credit report, employment history, financial statements, and other documents to assess creditworthiness. Additional requirements, such as a down payment or additional collateral, may also be requested depending on the loan amount. The higher the loan amount, the more stringent the approval criteria will be. Understanding that interest rates and fees will vary from lender to lender is essential. 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.