Mortgages
How home loans work and how to get a good one: mortgage types, rates and fees, PMI, refinancing, home equity loans and HELOCs, and help for first-time buyers.
How mortgages work
How Mortgages Work: A Plain-English Guide
A mortgage is a loan to buy a home, repaid in monthly payments over 15 to 30 years. This guide explains what's in your monthly payment, how interest and amortization work, 15- vs 30-year loans, what lenders look at, down payments and PMI, the steps from preapproval to closing, and what to do if you have trouble paying.
| Loan | Average rate |
|---|---|
| 30-year fixed Freddie Mac average Average rate: 7.32% | 7.32% |
| 15-year fixed Freddie Mac average Average rate: 6.68% | 6.68% |
See all 2 loan types and how we chose them
For information only, not a recommendation. Rates and terms change often and may depend on where you live; check the details with the provider before you apply. Pond.com isn't paid by any provider listed here.
Mortgage types
Refinancing
Refinancing a Mortgage: When It's Worth It and How to Do It
Refinancing replaces your mortgage with a new one, usually to get a lower rate, change your term, drop mortgage insurance or take cash out. This guide explains the types of refinance, what it costs, how to work out your break-even point, when it isn't worth it and the steps to apply.
| Loan | Average rate |
|---|---|
| 30-year fixed Freddie Mac average Average rate: 7.32% | 7.32% |
| 15-year fixed Freddie Mac average Average rate: 6.68% | 6.68% |
See all 2 loan types and how we chose them
For information only, not a recommendation. Rates and terms change often and may depend on where you live; check the details with the provider before you apply. Pond.com isn't paid by any provider listed here.
Home equity
Understanding your mortgage
A mortgage is probably the largest loan you'll ever take out, and small differences in rate and fees add up to thousands of dollars over the years. Our guides explain how home loans work, what to compare and how to keep more of your money.
Start with how mortgages work, which covers what's in your monthly payment, how interest and amortization work, 15- vs 30-year loans, what lenders look at and the steps from preapproval to closing. Then see which loan fits you in types of mortgages, which compares conventional, FHA, VA, USDA and jumbo loans, and decide between fixed and adjustable rates.
Before you choose a lender, learn how to compare mortgage offers using the Loan Estimate, and budget for closing costs. Buying your first home? Look into first-time home buyer programs for help with your down payment and closing costs.
Already have a mortgage? Learn how to get rid of PMI, when refinancing is worth it, whether to buy mortgage points, and whether you should pay off your mortgage early. To borrow against the value of your home, see home equity loans and HELOCs, compare a HELOC with a personal loan for home improvements, and, if you're 62 or older, learn how reverse mortgages work.
Still deciding whether to buy? Our Home section covers renting vs buying, how much house you can afford and saving for a down payment. Your credit score has a big effect on your rate, so see how to raise your credit score well before you apply.
Common questions
A lender makes the loan. A broker shops your application to several lenders and is paid by you or the lender. A servicer collects your payments and handles your escrow after closing, and it's often a different company from the lender that made the loan.
Often about 30 to 45 days from application to closing for a purchase, though it can be faster or slower depending on the lender, the appraisal and how quickly you send documents. Getting preapproved before you shop for a home saves time later.
Yes. Lenders usually want two years of tax returns showing steady self-employment income, and they look at your income after business expenses. If your tax returns don't reflect your real income, some lenders offer bank statement loans, usually at higher rates.