What Is a Mortgage and How Does It Work? (North Carolina Guide 2025)
By Jason Iacovelli, Senior Loan Officer | NMLS #3370 | 25+ Years Serving Wake County
Last Updated: November 4, 2025
If you're buying a home in North Carolina, whether in Raleigh, Cary, Durham, Chapel Hill, or Apex, one of the most pivotal questions you'll face is:
What exactly is a mortgage and how does it work?
Let's break it down simply:
A mortgage is a long-term loan you use to purchase a home. The home itself serves as collateral, meaning if you stop making payments, the lender has the legal right to foreclose and take possession of the property.
This loan is typically repaid over 15 to 30 years in monthly installments. Your monthly payment usually includes four key components: Principal, Interest, Taxes, and Insurance, or PITI.
When you choose a mortgage in North Carolina, especially as a first-time homebuyer, you're leveraging financial tools that allow you to buy a $350,000 home without needing the full amount in cash upfront.
How Does a Mortgage Work in North Carolina?
Here's how it works step-by-step:
- A lender gives you the funds to buy a home (e.g., $300,000 loan for a $350,000 home).
- You agree to repay the loan with interest over a set time frame (15, 20, or 30 years).
- You make monthly payments that include PITI.
- Until the mortgage is paid in full, the lender holds a lien on your home.
- Once paid off, the home is entirely yours. Free and clear.
✅ Example:
You put $50,000 down and borrow $300,000. Your lender funds the purchase, and you repay in monthly installments. The home is yours after 360 payments (30 years × 12 months).
Use Our Mortgage Calculator to see what you can afford in your area.
What Makes Up Your Monthly Mortgage Payment?
This includes the four PITI components:
- Principal: The amount you borrowed, reducing with each payment
- Interest: The cost the lender charges for borrowing money
- Taxes: Property taxes assessed by your county
- Insurance: Homeowners insurance and PMI (if applicable)
💡 Tip: Want to pay off your loan faster? Making extra payments toward principal can reduce your total interest and loan term.
Learn more about amortization and how your payments are structured.
Types of Mortgages Available in North Carolina
No one-size-fits-all here. Different mortgage programs serve different needs:
- Conventional Loans: Great for buyers with solid income and credit. Minimum 3% down. Learn more.
- FHA Loans: Ideal for first-time buyers or lower credit scores. As low as 3.5% down. Learn more.
- VA Loans: For military members and veterans. 0% down and no PMI. Explore VA Loan Benefits.
- USDA Loans: For rural areas, also 0% down. Explore USDA Loan Benefits.
- Jumbo Loans: For homes above $766,550 in value. Learn about Jumbo Loans.
How to Apply: The Mortgage Process in 6 Simple Steps
- Get Pre-Approved – Know what you can afford. Learn about pre-approval first.
- Find a Home – Work with an agent in your area
- Submit Full Application – Provide income, assets, employment info
- Appraisal & Underwriting – Lender reviews all documents and home value
- Final Approval – Get "clear to close" status
- Close & Move In – Sign documents, wire your down payment, get your keys!
⏱️ Total time to close in North Carolina: 30–45 days
See Complete Timeline and get started today.
Why It Pays to Work With a Local Mortgage Broker in North Carolina
As a broker with 25+ years helping families in Wake, Durham, and Orange Counties, I offer:
- Over 20+ lenders to choose from (not limited to one bank)
- Competitive rates and faster closings
- Personalized service (you deal with me, not a call center)
Apply with Jason
Contact Jason directly at jason.iacovelli@realphamortgage.com
💬 Got credit challenges? No problem. I help clients with all credit backgrounds find the right path to homeownership.
Final Thoughts: Your Next Step is Pre-Approval
A mortgage is more than a loan. It's your path to owning a home and building wealth. And it all starts with the right guidance.
📍 Whether you're in Raleigh, Cary, Apex, Durham, or Chapel Hill, I'm here to help you navigate every step.
👉 Ready to begin?
Learn what first-time buyers in Cary need to know, then explore down payment assistance options.
Get Pre-Approved in 24 Hours
Call me directly at 📞 919-525-3933
About Jason Iacovelli | NMLS #3370
Serving Wake County for over 25 years. I specialize in:
- FHA, VA, USDA, Jumbo & Conventional Loans
- First-time homebuyer programs
- Low credit score solutions
- Fast closings
📧 Email: jason.iacovelli@realphamortgage.com
📞 Call: 919-525-3933
🏠 Apply Online: Start Your Application
