Residential loans, often referred to as home loans or mortgages, are financial products that enable individuals to purchase or refinance residential properties. These loans are typically long-term commitments where the borrower repays the lender through monthly installments over a set period, which can range from 15 to 30 years or more. The loan is secured by the property, meaning that the lender holds a lien on the home until the loan is fully repaid. If the borrower defaults on the loan, the lender has the right to foreclose on the property to recover the remaining balance.

The process of obtaining a residential loan involves several steps, including applying with a lender, undergoing credit and income verification, and assessing the value of the property. Lenders use these factors to determine the borrower’s eligibility and the terms of the loan, such as the interest rate and repayment period. Borrowers typically make a down payment upfront, with the remainder of the property’s purchase price financed by the loan. The interest paid over the life of the loan can significantly impact the total cost of homeownership.

Residential loans are essential for making homeownership accessible to a broad range of individuals, allowing people to buy homes without needing the full purchase price upfront. They also play a crucial role in the economy by enabling property transactions and creating opportunities for wealth building through real estate. However, obtaining a residential loan is a major financial decision that requires careful consideration of one's ability to repay and the long-term commitment involved.