Mortgages - What They Are And How They Work By: Ben Morgais

As common as mortgages are, there are a surprisingly large number of us who are under false impressions about the way they function, and what they actually are. Often referred to as a mortgage home loan, they are not a loan in the traditional meaning of the word. The mortgage is basically a way of securing a debt to which the property is the security with the mortgagor as the person who will owe money to the mortgagor. However, it is easier to explain it as a legally binding document where the lender is protected from loss by using the property as security for the debt.

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. 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. A security measure designed for purchasing properties, called a lien, is enforced until the mortgage is cleared at the end of the term.



This is the collateral or the security for the mortgagee who has provided the security instrument. Records of this are normally kept in the public records section of the county courthouse or a similar establishment. The lien stays in force while the debt remains but the property is actually owned by the mortgagor. 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 time the mortgagee has any rights over your property is in the event that you default on payments when he can sell it to recover the outstanding debt. 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 legally recognized process that must take place often referred to as ‘judicial foreclosure'. I hope this brief introduction has further helped your understanding of an important but often overlooked area of personal finance.

Ben Morgais

http://www.allthefactsabout.com/mortgages

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