Housing Finance concept

Housing finance is a system that helps people buy homes. When someone wants to buy a
house but doesn't have all the money upfront, they can get a loan from a bank or a
mortgage company. This loan is called a mortgage. The person agrees to pay back the loan
amount plus interest over time, usually in monthly instalments.

The process starts with the buyer finding a house they like and can afford. Then, they apply
for a mortgage with a lender. The lender looks at the buyer's financial situation, including
their income, credit history, and other debts, to decide if they can afford the loan. If
approved, the lender gives the buyer the money to purchase the house, and the buyer
agrees to repay the loan according to the terms set, which typically spans several years.

The lender secures the loan with the property itself. This means if the buyer fails to make
payments as agreed, the lender can take ownership of the house through a legal process
called foreclosure.

Housing finance also involves various financial products and services related to
homeownership, such as mortgage refinancing (changing the terms of the loan), home
equity loans (borrowing against the value of the home), and mortgage insurance (protecting
the lender in case of default).

Government agencies like the Federal Housing Administration (FHA) and entities such as
Fannie Mae and Freddie Mac play important roles in housing finance by providing
guidelines, insurance, and liquidity to the mortgage market, making homeownership more
accessible to a broader range of people.

Overall, housing finance is crucial for enabling individuals and families to achieve their
dream of owning a home by providing access to affordable and manageable home loans.