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How does a mortgage loan work?
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A mortgage loan is a type of loan that is used to purchase a property, usually a house. The borrower agrees to pay back the loan, with interest, over a set period of time. The primary requirement to obtain a mortgage loan is that the borrower has enough income or assets to support the loan payments. Upon approval, a portion of the loan amount is typically disbursed to cover the cost of the property, and the rest is held as collateral by the lender until the loan is repaid in full. Payment of principal and interest is usually made on a monthly basis. Some mortgage loans may also require the borrower to pay private mortgage insurance (PMI).