The most important thing you must realize about a mortgage is that what you believe it to be is actually wrong. They are not for instance a loan, even though the vast majority of people believe they are and often refer to them as a mortgage home loan.
The terms mortgagee (the financier) and mortgagor (buyer), are part of a legal contract (mortgage) which uses the property as security on the debt. More accurately, it is a document that protects your lender's interest with your property itself and a legal agreement you have provided to a lender.
The mortgage has made it possible for people and companies to buy properties with only a small percentage of the purchase price as a deposit. The following information will give a more rounded understanding of how the whole process 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 security the mortgagee uses is called a lien which is a legal term that stays in force until all monies are repaid.
This means that the property becomes security against itself and is the protection a mortgagee requires to fulfill his promise of funding. The lien (document) is normally recorded at the local courthouse in the public records section.
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. This is a strange situation where the mortgagor still owns the property even though the debt still remains to be paid.
The mortgage is a surety for the benefit of the mortgagee, so should the debt remain unpaid then the amount owed can be reclaimed by the sale of the property. This process has many names and in the United States it is referred to as foreclosure but this does need to go through the courts.
This is a legally recognized process that must take place often referred to as 'judicial foreclosure'. If you were unsure about the definition before and the subject surrounding it, I trust this information has been of use.
About the Author:
Did you read the contract that you signed when you received your mortgage from your financier? Or are you now negotiating for a Mortgage? Visit our website to learn the difference between a mortgage and a loan and prevent foreclosure
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