There are many misconceptions about mortgages which I hope this article will put right. Some people have gotten into the habit of calling them mortgage home loans but that isn't right at all as they are not loans at all. The borrower who is also called the mortgagor and uses a mortgage to pledge real property to the lender, also called the mortgagee, as security against the debt for the rest of the value of the property. Actually, it is in fact a legal document that is designed to ensure the lenders financial interests are secure.
The facility that a mortgage creates means individuals and companies can acquire land or property without needing the full face value to purchase it at the time. Misunderstandings on how the system operates also creates problems but the crucial points are dealt with during the remainder of this article. 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 the mortgagee uses is called a lien which is a legal term that stays in force until all monies are repaid.
The property you are buying does in fact become security for the loan or mortgage that has been sought to pay for it and is the protection a mortgagee needs if he, or she, is going to continue making house purchases. This lien than becomes a matter of public record when it is registered at the county courthouse or equivalent. The lien stays in force while the debt remains but the property is actually owned by the mortgagor. 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.
This means the only occasion that can arise whereby the mortgagee can legally sell your home is if you stop making payments and it needs to be sold to repay the finance used to purchase it. Should they need to reclaim these costs then the case will be held in court and the procedure called foreclosure will be started. This is a further step but it is a legal formality which needs to be taken and is often referred to judicial foreclosure. This is quite a short introduction to this subject, as it is much more complex, but this information should help make this important issue much clearer.
The facility that a mortgage creates means individuals and companies can acquire land or property without needing the full face value to purchase it at the time. Misunderstandings on how the system operates also creates problems but the crucial points are dealt with during the remainder of this article. 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 the mortgagee uses is called a lien which is a legal term that stays in force until all monies are repaid.
The property you are buying does in fact become security for the loan or mortgage that has been sought to pay for it and is the protection a mortgagee needs if he, or she, is going to continue making house purchases. This lien than becomes a matter of public record when it is registered at the county courthouse or equivalent. The lien stays in force while the debt remains but the property is actually owned by the mortgagor. 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.
This means the only occasion that can arise whereby the mortgagee can legally sell your home is if you stop making payments and it needs to be sold to repay the finance used to purchase it. Should they need to reclaim these costs then the case will be held in court and the procedure called foreclosure will be started. This is a further step but it is a legal formality which needs to be taken and is often referred to judicial foreclosure. This is quite a short introduction to this subject, as it is much more complex, but this information should help make this important issue much clearer.
About the Author:
The Author: Dai1952 has written many Informative Articles for ArticleXtra Directory of Articles. Visit ArticleXtra to read in-depth information on every aspect of Locating and Obtaining a Mortgage.
Posts
No comments:
Post a Comment