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.
This system works so successfully because the risk of loss on the part of the mortgagee is all but eliminated as they have legal possession of the property until the debt is completely repaid. This lien becomes a part of public record when it is registered at the county court-house or other office depending on your locale. The lien remains in force while the debt is outstanding but the property is really owned by the mortgagor. What this means is that even though the mortgagee has possession of the mortgage he is not the owner of the property nor does he have the title.
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. 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 done in order for it to be considered legal; this type of foreclosure is referred to as a judicial foreclosure. Obviously there is much more to the subject than this, but these are the basic foundations upon which the mortgaging system has been constructed.
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.
This system works so successfully because the risk of loss on the part of the mortgagee is all but eliminated as they have legal possession of the property until the debt is completely repaid. This lien becomes a part of public record when it is registered at the county court-house or other office depending on your locale. The lien remains in force while the debt is outstanding but the property is really owned by the mortgagor. What this means is that even though the mortgagee has possession of the mortgage he is not the owner of the property nor does he have the title.
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. 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 done in order for it to be considered legal; this type of foreclosure is referred to as a judicial foreclosure. Obviously there is much more to the subject than this, but these are the basic foundations upon which the mortgaging system has been constructed.
About the Author:
Author Bio: Dai1952 writes many Interesting Articles for ArticleXtra Directory of Articles. See ArticleXtra to read detailed information on all aspects of Locating and Securing a Mortgage.
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