What Is Mortgage
Despite increasing numbers of the population having a mortgage, it is amazing how few people actually know what they are and how they work. The first thing to put straight is that it is not a loan, although they are normally referred to as a mortgage home loan. A mortgage is a secured debt using the property that is being purchased as the security for the debt until it is fully repaid. This is in fact the document which ensures the financing of the property is safeguarded until the end of the term, usually twenty five years.
Without mortgages being available, people and many businesses would not be able to afford the full asking price of a property if it was required they pay this amount upfront. Although this article is brief, below are points that will help more in the understanding of how this system operates. The problem arises because so many people refer to the buyer as the Borrower and the financier as The Lender which leads people to believe that the money has been loaned which is not the case. The security is in fact a lien which means the mortgagee has legal possession of your property until the debt is repaid.
The property you are buying does in fact become collateral for the finance that has been sought to pay for it and is the protection a mortgagee needs if he is going to continue financing house purchases. This lien is recorded within public records likely to be found at a county courthouse or similar establishment. While the property is owned now by the mortgagor, the lien cannot be reversed until the amount specified in the debt is paid off. This is a strange situation where the mortgagor still owns the property even though the debt still remains to be paid.
However if the mortgagor or the owner defaults on his or her payments, the mortgagee has the right to dispose of the property to reclaim funds. In the unfortunate event that requires the property to be sold or Foreclosed, then the case will need to be presented to the courts for approval. This procedure is carried out in order for it to be legally recognized and can be referred to as Judicial Foreclosure. For the sake of clarity this is only a brief description of a much more complex subject but it should have helped explain the basic subject.
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Add comment June 28th, 2008