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Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

Consumer Protection Topics - Mortgages

Mortgage Basics

A mortgage is a document signed by a borrower when a home loan is made that gives the lender a right to take possession of the property if the borrower fails to pay off the loan. Shopping around for a home loan or mortgage will help you to get the best financing deal. A mortgage--whether it's a home purchase, a refinancing, or a home equity loan--is a product, just like a car, so the price and terms are negotiable. You'll want to compare all the costs involved in obtaining a mortgage.  Shopping, comparing, and negotiating can save you thousands of dollars.

Types of Mortgages

There are many types of home loans and the most common is a fixed rate loan that is repaid over 30 years. With a fixed rate loan, a borrower’s monthly principal and interest payments remain the same for the entire loan.  Other loans have adjustable interest rates, which means a borrower’s principal and interest payments can increase (or decrease) over time. Less common, and perhaps more risky, are interest-only and negative amortization loans.

Consumer protections for home loans are in many cases based on the type of loan. For example, there are disclosure requirements specifically tailored for adjustable rate loans so consumers know how their payments may increase. Other protections are particular to property located in flood zones. The next section lists some of these consumer protections, focusing on those that provide the most benefit to the greatest number of consumers.

Consumer Protections Available

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