Mortgage Basics: When many people hear the word mortgages, they envision a complex tangle of long-term debt. Indeed, the world of mortgages abounds in variations of creative financing — a formidable-sounding obstacle for the neophyte. For many people, the purchase of a home represents the biggest single investment they make in a lifetime. Because they can seldom afford to pay cash on the barrel, they end up committing themselves to 20 or 30 years of mortgage payments. Yet, few stop to consider that the mere difference of 1 percent interest on, say, a $70,000 mortgage, can add more than $20,000 to the effective cost of buying the home over the full term of a 30-year loan. Since mortgages probably play such a big part in your life, you should develop a good working knowledge of this investment.

Home Equity Loan: In recent years, banks and other institutions have begun offering credit lines secured by your home or other property. Once the credit line is approved, you may access it as needed by writing a check. You are charged interest only on the amount you actually borrow and rates typically are low because the loan is secured by your property. Some institutions allow you to defer repayment of the principal by making interest-only payments. In some cases, the bank may charge loan origination fees and an annual fee for maintaining the line of credit.