Mortgage defined to its basic definition
No commentsIf you were to be asked to describe and give a definition for the word mortgage, would you be able to, because it is surprising how few people know what they really are. The worst thing to call one is a mortgage home loan and while this expression is in common usage, it is totally incorrect. 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. 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.
A mortgage is used as a method by which individuals or businesses can purchase residential or commercial property without paying the full value upfront. Although this article is brief, below are points that will help more in the understanding of how this system operates. Unfortunately it is our own common use of word like Borrower and Lender that has mislead people into thinking a mortgage is a loan when they should be referred to as Mortgagor and Mortgagee respectively. The document itself produces a lien on your property which is not cleared until the debt is paid.
The mortgagee’s money is then protected by this knowing the property is in fact security against its own debt. Being a legal contract, the lien will be lodged within the records at the county or city courthouse (or a similar public office). Ownership of the property is then yours and cannot be transferred to anyone else until you have paid off the amount required to reverse the lien. So how this works is that the mortgagor (you) owns the property completely even though the mortgagee has possession of the mortgage but not the title.
The only right that your mortgage gives to the mortgagee over your property is to sell it to recover funds in the case that you do not pay off your debt. If in the unfortunate event this happens, the process whereby the funds are reclaimed is called foreclosure. To ensure that everything is legal and above board, the court will place a ruling on the disposal in a process called judicial foreclosure. This is only a short introduction as the subject is much more complex but this information should make this important issue much clearer.
Monday, April 28th, 2008 at 11:16 pm and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
