Everything you wanted to know about mortgages and home loans
Mortgage loans are loans obtained for the purchase of property or for the purpose of refinancing obtained from mortgage brokers, banks, landlords or online lenders. Such mortgage loans are generally long-term loans where the contract may typically exist for 15 or 30 years. Mortgage loans can be obtained directly or through intermediaries.
There are certain important terms, which must be known in mortgage loans:
Property: the land, residence or building on which the contract is concluded.
Mortgage: The lender creates certain security restrictions such as payment of outstanding debts before selling the property.
Lender: the bank or financial intermediaries.
Borrower: the person who obtains the mortgage loan.
Interest: Charges earned by using the lender’s financing.
Foreclosure – This is a very essential item in the event that payment defaults occur and the lender has the right to repossess the property.
When a mortgage loan is closed, the mortgagee must sign documents so that the mortgagor has a lien on the mortgaged property. If the borrower defaults on the payments, the lender has every right to seize the property through the foreclosure process.
In certain situations, the borrower must pay the lender some additional payment in addition to the principal and interest of the mortgage loans. Such additional charges may be for property hazard insurance and real estate taxes. As a normal practice, the amount required for taxes and insurance is calculated and divided into monthly charges, which are added to the cost of principal and interest. Said amount, which is collected monthly, is deposited in an account called an escrow account and the payment of taxes and insurance is made annually when required. There are many types of mortgage loans, which vary according to different characteristics.