Mortgage
Definition
A loan to buy real estate, typically a house. You put down a percentage (20% is standard) and borrow the rest. Over 15-30 years, you make monthly payments that cover principal, interest, property taxes, insurance, and possibly mortgage insurance if your down payment is under 20%.
Why It Matters
A mortgage is often the largest loan you'll take, so the terms matter enormously. A 1% difference in interest rate on a $300,000 mortgage costs ~$75,000+ over 30 years. Shopping for rates and understanding your DTI impact is critical.
Example
Buy a $400,000 house with 20% down ($80,000). Borrow $320,000 at 6% for 30 years. Monthly payment: ~$1,920. Over 30 years, you'll pay ~$691,200 total, of which ~$371,200 is interest.