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Mortgage - Basics For Beginners

*As of July 6, 2020, Quicken Loans is no longer accepting USDA loan applications.

For many, owning a home is part of the American dream. For most homeowners in America, getting a mortgage is just one of the steps it takes to get there.

If you’re contemplating homeownership and wondering how to get started, you’ve come to the right place. Here, we’ll cover all the mortgage basics, including loan types, mortgage lingo, the home buying process, and more.

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  • 0% commission for loan granting and earlier repayment (APR 3.63%)
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  • check the status of your application in the mobile app, even if you do not have an account with us

A Simple Definition Of A Mortgage

Before we dive in, let’s talk about some mortgage basics. First, what does the word “mortgage” even mean?

A simple definition of a mortgage is a type of loan you can use to buy or refinance a home. Mortgages are also referred to as “mortgage loans.” Mortgages are a way to buy a home without having all the cash upfront.

Who Gets A Mortgage?

Most people who buy a home do so with a mortgage. A mortgage is a necessity if you can’t pay the full cost of a home out of pocket.

There are some cases where it makes sense to have a mortgage on your home even though you have the money to pay it off. For example, investors sometimes mortgage properties to free up funds for other investments. 

To qualify for the loan, you must meet certain eligibility requirements. Therefore, a person who gets a mortgage will most likely be someone with a stable and reliable income, a debt-to-income ratio of less than 50% and a decent credit score (at least 580 for FHA loans or 620 for conventional loans).

What’s The Difference Between A Loan And A Mortgage?

The term “loan” can be used to describe any financial transaction where one party receives a lump sum and agrees to pay the money back.

A mortgage is a type of loan that’s used to finance property. A mortgage is a type of loan, but not all loans are mortgages.

Mortgages are “secured” loans. With a secured loan, the borrower promises collateral to the lender in the event that they stop making payments. In the case of a mortgage, the collateral is the home. If you stop making payments on your mortgage, your lender can take possession of your home, in a process known as foreclosure.