Here's a breakdown of the key components of a mortgage:
- Principal: The amount borrowed to purchase or refinance the property.
- Interest: The fee charged by the lender for borrowing the money, expressed as a percentage of the principal.
- Property: The house or condominium that serves as collateral for the loan.
- Lender: The financial institution or individual that lends the money.
- Mortgage payment: The monthly payment made to the lender, which typically includes both principal and interest.