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What Your Mortgage Actually Is

Jun 26, 2008
Despite increasing numbers of the population having a mortgage, it is amazing how few people actually know what they are and how they work.This article is hopefully going to explain many of the things people believe about mortgages that are actually false. 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 legal document between a mortgagor or the buyer and the mortgagee or the finance supplier and consists of a way for a person to purchase a property using it as security. Actually, it is in fact a legal document that is designed to ensure the lenders financial interests are secure.

If it wasn't for the availability of mortgages, individuals and businesses would need to find the full amount for a property in order to purchase it. There are also misconceptions about how they work so below is a description of how the process works. As it is not a loan, the mortgagor should not be called The Borrower but mortgagor and the company providing the finance should not be called The Lender because they are the mortgagee. The security is in fact a lien which means the mortgagee has legal possession of your property until the debt is 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. This act makes the purchase and the ownership of the house official and no-one can transfer this ownership until the debt is fully paid off. Even if your property is mortgaged, you still own the property wholly and completely and nobody else, not even the mortgagee has title to the property.

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 is done in order for it to be considered legal; this type of foreclosure is referred to as a 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.
About the Author
Anthony Dean has helped many home owners with the loan modification process. See how he can help with your loss mitigation here
Modify Your Existing Mortgage
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