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Simple English definitions for legal terms
conventional mortgage
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A quick definition of conventional mortgage:
A conventional mortgage is a type of loan that a person gets from a bank or other financial institution to buy a house. It is not backed by the government. The borrower agrees to pay back the loan with interest over a certain period of time. If they don't pay, the bank can take the house. It's important to make the payments on time to keep the house.A more thorough explanation:
A conventional mortgage is a type of mortgage that is not backed by government insurance. In this type of mortgage, the borrower transfers a lien or title to the lending bank or other financial institution. These mortgages typically feature a fixed periodic payment of principal and interest throughout the mortgage term and are commonly used for home financing.
Example: John wants to buy a house and applies for a conventional mortgage from a bank. The bank approves his application and lends him the money to buy the house. John will make fixed monthly payments to the bank until he pays off the loan.
This example illustrates how a conventional mortgage works. John borrows money from the bank and agrees to pay it back over time with interest. The bank holds a lien on the property until John pays off the loan in full.