Tips For Mortgage
By admin | July 11, 2008
There are many misconceptions about mortgages which I hope this article will put right. Often referred to as a mortgage home loan, they are not a loan in the traditional meaning of the word. The mortgage is a legal contract between the mortgagor who is buying the property and the mortgagee, the person supplying the finance and security against the property. The document is just a simple way to safeguard the lenders interests.
A mortgage is used as a method by which individuals or businesses can purchase residential or commercial property without paying the full value upfront. The following information will give a more rounded understanding of how the whole process operates. It is because the mortgagor is often referred to as the Borrower that has led to the misunderstanding that the finance for the purchase is a loan in the same way the name Lender is used to refer to the mortgagee. The property has a lien, which is the legal ownership of the property by the mortgagee until the agreement between the two parties has been fulfilled.
This system works so successfully because the risk of loss on the part of the mortgagee is all but eliminated as they have legal possession of the property until the debt is completely repaid. Records of this are normally kept in the public records section of the county courthouse or a 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 situation may seem strange but in essence what it means is that the property is owned completely by the mortgagor and not the mortgagee who also does not have the title.
The only right the mortgagee has over the property now is if payments are missed and the property needs to be sold so the mortgagee can recoup his funds. When this happens, the procedure that follows is called foreclosure but even at this stage it is required to go through the courts first. This is done in order for it to be considered legal; this type of foreclosure is referred to as a judicial foreclosure. Obviously there is much more to the subject than this, but these are the basic foundations upon which the mortgaging system has been constructed.
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