1

mortgage

noun mort·gage \ ˈmȯr-gij \
Updated on: 13 Oct 2017

Definition of mortgage

1 :a conveyance (see conveyance 2a) of or lien against property (as for securing a loan) that becomes void upon payment or performance according to stipulated terms
  • took out a mortgage in order to buy the house
2 a :the instrument evidencing the mortgage
b :the state of the property so mortgaged
c :the interest of the mortgagee in such property

Examples of mortgage in a Sentence

  1. He will have to take out a mortgage in order to buy the house.

  2. They hope to pay off the mortgage on their home soon.

Recent Examples of mortgage from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'mortgage.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of mortgage

Middle English morgage, from Anglo-French mortgage, from mort dead (from Latin mortuus) + gage gage — more at murder


2

mortgage

verb

Definition of mortgage

mortgaged; mortgaging
transitive verb
1 :to grant or convey by a mortgage
2 :to subject to a claim or obligation :pledge

Examples of mortgage in a Sentence

  1. She mortgaged her house in order to buy the restaurant.

  2. I've mortgaged all my free time this week to the hospice and won't be able to come to the party.

Recent Examples of mortgage from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'mortgage.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of mortgage

mortgage Synonyms

Synonyms
commit, engage, pledge, troth
Related Words
affiance, betroth, plight, promise, swear, vow; contract, enlist, enroll (also enrol), sign on, sign up; overcommit
Near Antonyms
renege

Financial Definition of MORTGAGE

balloon mortgage

What It Is

A balloon mortgage is a mortgage with a large payment made near or at the end of a loan term.

How It Works

Unlike a loan whose total cost (interest and principal) is amortized -- that is, paid incrementally during the life of the loan -- most or all of a balloon mortgage's principal is paid in one sum at the end of the term. That sum is called the balloon payment (or sometimes the bullet). Sometimes the interest is collected as part of the balloon payment as well, though in many cases the loan is interest-only during the term of the loan with only the outstanding principal due at the end.

For example, suppose someone takes out a mortgage for $417,000. To avoid a lengthy graphic with 360 payments for a 30-year mortgage, we'll assume that the mortgage is only two years long (this is an unrealistic loan term, but it works for our purposes).

In a normal mortgage scenario (the left side of the graphic), the borrower would make a series of equal payments that are composed of principal repayment and interest payment so that by the end of the loan term, the borrower has paid down all of the loan. For a balloon mortgage (the right side of the graphic), however, the monthly payments might be extremely low for most of those two years—because at the end of the two years the borrower has to make a giant balloon payment to pay off the loan.

Why It Matters

Balloon mortgages can be common, and they have the advantage of lower initial payments. They can be preferable for people who have near-term cash flow issues but expect higher cash flows later, as the balloon payment nears. The borrower must, however, be prepared to make that balloon payment at the end of the term. Sometimes the lender will roll that amount into a new mortgage for the borrower. This is often called a two-step mortgage.


junior mortgage

What It Is

A junior mortgage is a loan secured by the equity in a house. Equity equals the value of the house less the balance owed on the homeowner's first (or in some cases, preceding) mortgages.

Junior mortgages are not the same as home equity lines of credit (HELOCs).

How It Works

Junior mortgages are very similar in concept to traditional mortgages. For example, junior mortgages generally must be repaid over a fixed period. Some lenders may offer fixed rates on these loans; others might offer variable rates.

Like first mortgages, most banks will also charge points and other fees for generating the junior mortgage (attorney fees, title fees, insurance and documentation fees, for example), and these costs vary by bank. In some cases, the lender might charge a fee if the borrower prepays the loan. And because the loan is secured by a house, if the borrower defaults, the lender may foreclose on the house.

Why It Matters

Junior mortgages can be viable options when compared to credit cards or other high-interest, unsecured loans. In addition, mortgage interest is tax deductible, making the interest rates on junior mortgages sometimes lower than they appear when one considers the tax savings.

However, not all junior mortgages are created equally. Borrowers are well served to compare fees, interest rates and repayment terms among lenders. After all, when a borrower defaults, his or her home could end up belonging to the bank for good.


mortgage

What It Is

A mortgage is a loan in which property or real estate is used as collateral. The borrower enters into an agreement with the lender (usually a bank) wherein the borrower receives cash upfront then makes payments over a set time span until he pays back the lender in full.

How It Works

Mortgage loans are usually entered into by home buyers without enough cash on hand to purchase the home. They are also used to borrow cash from a bank for other projects using their house as collateral.

There are several types of mortgage loans and buyers should assess what is best for their own situation before entering into one. Types of loans are characterized by their term dates (usually from 5 to 30 years, some institutions now offer loans up to 50 year terms), interest rates (these may be fixed or variable), and the amount of payments per period.

[If you're ready to buy a home, use our Mortgage Calculator to see what your monthly principal and interest payment will be.]

Mortgages are like any other financial product in that their supply and demand will change dependent on the market. For that reason, sometimes banks can offer very low interest rates and sometimes only they can only offer high rates. If a borrower agreed upon a high interest rate and finds after a few years that rates have dropped, he can sign a new agreement at the new lower interest rate -- after jumping though some hoops, of course. This is called "refinancing."

Why It Matters

Mortgages make larger purchases possible for individuals lacking enough cash to purchase an asset, like a house, up front. Lenders take a risk making these loans as there is no guarantee the borrower will be able to pay in the future. Borrowers take risk in accepting these loans, as a failure to pay will result in a total loss of the asset.

Home ownership has become a cornerstone of the American Dream. For most people, their home is their most valuable asset. Mortgages make home buying possible for many Americans. Mortgages are not always easy to secure, however, as rates and terms are often dependent on an individual's credit score and job status. Failure to repay allows a bank to legally foreclose and auction off the property to cover its losses.



MORTGAGE Defined for English Language Learners

mortgage

noun

Definition of mortgage for English Language Learners

  • : a legal agreement in which a person borrows money to buy property (such as a house) and pays back the money over a period of years


mortgage

verb

Definition of mortgage for English Language Learners

  • : to give someone a legal claim on (property that you own) in exchange for money that you will pay back over a period of years


MORTGAGE Defined for Kids

1

mortgage

noun mort·gage \ ˈmȯr-gij \

Definition of mortgage for Students

1 :a transfer of rights to a piece of property (as a house) that is usually in return for a loan of money and that is canceled when the loan is paid
2 :the document recording such a transfer

2

mortgage

verb

Definition of mortgage for Students

mortgaged; mortgaging
:to transfer rights to a piece of property in return for a loan of money with the understanding that the rights end when the loan is paid

Law Dictionary

1

mortgage

noun mort·gage \ ˈmȯr-gij \

legal Definition of mortgage

1 a :a conveyance of title to property that is given to secure an obligation (as a debt) and that is defeated upon payment or performance according to stipulated terms
  • shows that a deed was intended only as a mortgage
  • —W. M. McGovern, Jr. et al.
b :a lien against property that is granted to secure an obligation (as a debt) and that is extinguished upon payment or performance according to stipulated terms
  • creditors with valid mortgages against the debtor's property
  • —J. H. Williamson
c :a loan secured by a mortgage
adjustable rate mortgage
:a mortgage having an interest rate which is usually initially lower than that of a mortgage with a fixed rate but which is adjusted periodically according to an index (as the cost of funds to the lender)
balloon mortgage
:a mortgage having the interest paid periodically and the principal paid in one lump sum at the end of the term of the loan
blanket mortgage
:a mortgage of or against all of the property of the mortgagor
chattel mortgage
:a mortgage of or against personal or movable property (as an airplane) — compare pledgesecurity interest 2 at interest 1
collateral mortgage
in the civil law of Louisiana :a mortgage against movable or immovable property that is given to secure a written obligation (as a note) which is pledged as collateral security for a principal obligation — see also collateral note at note
construction mortgage
:a mortgage that secures a loan which finances construction
conventional mortgage
1 in the civil law of Louisiana :a mortgage that is created by a written contract
2 :a mortgage that is not guaranteed by a government agency
equitable mortgage
:a constructive or implied mortgage :a transaction (as a conveyance) that does not have the form of a mortgage but is given the effect of a mortgage by a court of equity because the parties intended it to be a mortgage
first mortgage
:a mortgage that has priority over all other security interests except those imposed by law
fixed rate mortgage
:a mortgage having an interest rate that stays the same
general mortgage
in the civil law of Louisiana :a blanket mortgage that burdens all present and future property
home equity conversion mortgage
:reverse mortgage in this entry
judicial mortgage
in the civil law of Louisiana :a mortgage lien that secures a judgment debt and is created by filing a judgment with the recorder of mortgages
junior mortgage
:second mortgage in this entry
leasehold mortgage
:a mortgage under which a leasehold interest in property secures a loan or obligation
legal mortgage
in the civil law of Louisiana :a mortgage that secures an obligation which is created by a law and which does not have to be stipulated to by the parties
open-end mortgage
:a mortgage that secures a loan agreement which allows the mortgagor to borrow additional sums usually up to a specified limit
purchase money mortgage
:a mortgage that is given (as to a lender) to secure a loan for all or some of the purchase price of property; also :a mortgage given to a seller of property to secure the unpaid balance of the purchase price
reverse mortgage
:a mortgage that allows elderly homeowners to convert existing equity into available funds provided through a line of credit, a cash advance (as for the purchase of an annuity), or periodic disbursements to be repaid with interest when the home is sold or ceases to be the primary residence, when the borrower dies or some other specified event occurs, or at a fixed maturity date
second mortgage
:a mortgage lien that is subordinate in priority to a first mortgage called also junior mortgage
senior mortgage
:first mortgage in this entry
special mortgage
:a mortgage on specified property
wrap-around mortgage \ˈrap-ə-ˌrau̇nd-\
:a second or later mortgage that incorporates the debt of a previous mortgage with additional debt for another loan
2 a :an instrument embodying and containing the provisions of a mortgage
  • executing and recording mortgages
b :the interest of a mortgagee in mortgaged property
  • the bank holds the mortgage

Origin and Etymology of mortgage

Anglo-French, from Old French, from mort dead (from Latin mortuus) + gage security


2

mortgage

transitive verb

legal Definition of mortgage

mortgaged; mortgaging
1 :to grant or convey by a mortgage
  • mortgaged the property to the bank
2 :to encumber with a mortgage


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