The Beginner's Mortgage Guide By: Don K. Woody

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. The first thing to put straight is that it is not a loan, although they are normally referred to as a mortgage home loan. In fact a mortgage is like a contract whereby the person buying the property (mortgagor) arranges finance to cover the cost from a lender (mortgagee) and the property is used as security against the debt until it is fully repaid. What this means is this document is a way for the property to be used to safeguard any potential problems with payment until the house is finally paid for.

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 works also create problems but the main points are dealt with during the rest of this article. 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. A lien is a means by which the mortgagor can purchase a home but it is the mortgagee that retains legal ownership until the arrangement between them has been completed (the debt is paid off).

This is the collateral or the security for the mortgagee who has provided the security instrument. Information about the lien is registered at a county courthouse, or similar, to ensure the contract is official and binding. This is now a recorded legal agreement and cannot be reversed until the full balance of the debt is cleared. This is a strange situation where the mortgagor still owns the property even though the debt still remains to be paid.

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. 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 procedure is carried out in order for it to be legally recognized and can be referred to as Judicial Foreclosure. This is the subject in brief and while there is a great deal more to it, perhaps this will help to clear up any ambiguities you may have previously experienced.


If you want to delve more into the subject mortgage, you should visit http://www.remaat.com and read, The Beginner's
Mortgage Guide.

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