30 years, $200k+
What is a mortgage?
A mortgage is a loan used to buy real estate where the property itself serves as collateral. You borrow the purchase price minus your down payment, then repay over 15–30 years with interest. On a $300,000 loan at 7% for 30 years, you pay $418,527 total — $118,527 in pure interest. Your monthly payment covers four things: principal, interest, property taxes, and homeowner's insurance (PITI).
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Try calculatorKey takeaways
04 · ideas- A mortgage lets you buy a home by borrowing against the property itself
- On a $300k loan at 7%, you pay $418k total — $118k in interest
- Monthly payment covers principal, interest, taxes, and insurance (PITI)
- Amortization means early payments are mostly interest, not equity
Illustrative chart
$200k · 7.5% · 30yr
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A mortgage is a loan to buy property where the property itself is the collateral. If you stop paying, the lender can take the home — this is called foreclosure.
Here's how it works in plain terms:- You find a home priced at $300,000
- You pay $60,000 down (20%)
- The bank lends you $240,000
- You repay that loan over 30 years with interest
What you actually pay: On a $240,000 loan at 7% for 30 years, your monthly payment is about $1,597. Over 30 years, you pay $575,000 total — more than twice what you borrowed. The extra $335,000 is interest.
The four parts of every mortgage payment (PITI):- Principal — pays down your loan balance
- Interest — the lender's fee for borrowing
- Taxes — property taxes collected monthly and paid annually
- Insurance — homeowner's insurance (and PMI if down payment < 20%)