top of page
  • Writer's picture Treavor Dodsworth CFP®, CPA, CKA®

#36 - Mortgage Made Simple


Many industries have their own specific terminology. It can honestly sound like a foreign language to those not working in that field. Like when my wife tries to tell me about "triage." Or I say something about "Fannie Mae" and my wife thinks I am talking about chocolate (full disclosure I think she was joking).

This post is dedicated to simplifying the complex- specifically mortgages.

Let's start with Investopedia's definition: "A mortgage is a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments."

In other words, if you want to purchase a home but don't have enough money, a bank may give you the money you need to buy the home. The bank requires you to pay back that money and an additional amount of money (interest). This is called a loan, and specifically, this would be a mortgage since it is a loan on your home (a type of real estate property).

Oftentimes individuals will pay their property taxes and insurance as a part of the mortgage payment. This is called escrow. You are not actually paying your property taxes and insurance directly at the time you make your mortgage payment. That additional escrow money is being held in a separate account and then the property tax bill and insurance are paid for you from that account by the mortgage servicer.

Refinancing is when you get a new mortgage to pay off the old mortgage. This can make sense for a variety of reasons but is typically done when people are trying to lower the interest rate on their mortgage. 

Refinancing is receiving a particular amount of media attention now as mortgage rates have gone down. See the 30yr mortgage rate chart from YCharts.

For those of you with a mortgage, it would be worth checking with your lender (and a few other lenders for comparison) to see if you can receive a lower rate. You have to balance the costs associated with receiving the new loan with the savings on the new mortgage.

This was admittedly an oversimplification, but hopefully, that oversimplification also brought a little clarity to the word mortgage.


Interesting Article(s) or Video(s)

  • Link to the IRS's online tool for tracking the individual stimulus payments.

  • What actually happens if you refuse to complete the census? The American Bar Association weighs in.

  • This is so incredible. An anonymous donor sent gift cards to every household in Earlham, Iowa.


Thank you for reading! Is there any financial concept you would like me to expand on?


Thanks! Message sent.

All written content on this website is for information purposes only. Opinions expressed herein are solely those of Sycomore Financial, unless otherwise specifically cited.  Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. The owner of this website takes great care to thoroughly research the information provided to ensure that it is accurate and current. Nonetheless, the content on this website is not intended to provide tax, legal, accounting, financial, or professional advice, and readers are advised to seek out qualified professionals that provide advice on these issues. All information or ideas provided should be discussed in detail with an advisor, accountant, legal counsel, and/or other pertinent professionals prior to implementation. In addition, the owner cannot guarantee that the information on this website has not been outdated or otherwise rendered incorrect by subsequent new research, legislation, or other changes in law or binding guidance. Neither Sycomore Financial or it's owner shall have any liability or responsibility to any individual or entity with respect to losses or damages caused or alleged to be caused, directly or indirectly, by the information contained on this website. In addition, any advice, articles, or commentary included on this website do not constitute a tax opinion and are not intended or written to be used, nor can they be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. Any mention of an investment product or solution is not a recommendation to buy or sell. ETFs that are mentioned may not accurately reflect the market segment mentioned. Past performance is not a guarantee of future results. Any mention of rates or return should not be seen as a guarantee those rates or return will be received.

bottom of page