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| This article is part of WikiProject Definitions. Consider editing to improve it. View articles referencing this definition. |
A mortgage is a method of using property (real or personal) as security for the performance of an obligation, usually the payment of a debt.
The term mortgage refers to the legal device used for this purpose, but it is also commonly used to refer to the debt secured by the mortgage, the mortgage loan. With the advent of the mortgage backed securities, the market for mortgage loan has been growing quickly and is estimated as large as the Treasury debt market.
In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than other property (such as ships) and in some cases only land may be mortgaged. Arranging a mortgage is seen as the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full value immediately.
The interest rate required of a mortgage is determined by the credit rating of the borrower -- most often divided into prime and subprime mortgage. It may also be related to the strategy of the lender in that, depending on growth targets and competition, the lender may offer more competitive rates.
[edit] See Also
- Mortgage on Wikipedia.
- Mortgage Market Meltdown
- Mortgage REITs
There are derivatives built on top of various kinds of mortgage. See also:
The following topics are also related:
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