If you were to be asked to describe and give a definition for the word mortgage, would you be able to, because it is surprising how few people know what they really are. 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 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. More accurately, it is a document that protects your lender’s interest with your property itself and a legal agreement you have provided to a lender.
A mortgage is used as a method by which individuals or businesses can purchase residential or commercial property without paying the full value upfront. The following information will give a more rounded understanding of how the whole process operates.
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 document itself produces a lien on your property which is not cleared until the debt is paid.
The property you are buying does in fact become collateral for the finance that has been sought to pay for it and is the protection a mortgagee needs if he is going to continue financing house purchases. Records of this are normally kept in the public records section of the county courthouse or a similar establishment.
While the property is owned now by the mortgagor, the lien cannot be reversed until the amount specified in the debt is paid off. While the mortgagee has legal possession of the property, he does not own it or have the title to it, the legal owner is the mortgagor.
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. This is the dreaded process referred to as foreclosure but if the property is used as security, then the foreclosure must go through the court system.
This is a legally recognized process that must take place often 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.
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