A mortgage is a method of using property (real or personal) as security for the payment of a debt. Arranging a mortgage is seen as the typical method by which individuals or businesses can purchase residential or commercial real estate without the need to pay the full value immediately.
This lender prepared document states that if the customer does not pay as agreed, the owners give the lender the right to take the property (foreclosure). Every owner of the property must sign this document. A person can be an owner by being on the Deed, or via state law.
Main Participants in a Mortgage
Creditor or Mortgagee or Lender
They are Banks, Insurers or other financial institutions that make loans available for the purpose of real estate purchase.
Debtor or Mortgagor or Borrower or Obliger
The individual home-owners, landlords or businesses who are purchasing their property by way of a loan.
The debt is sometimes referred to as the ‘hypothecation’
The debtor may approach a Mortgage Broker or Financial Adviser to help them source an appropriate creditor typically by finding the most competitive loan. There are many established players in the internet providing such assistance.
Interest Rate: The percentage a borrower pays for the use of the mortgage money.
Points: Mortgage loan discount points are a one-time charge assessed at closing by the lender to bring down the customer’s interest rate. Each point is equal to one percent of the loan amount.
Term: The period of time between beginning date and ending date of the mortgage.
1. 30 years = 360 months
2. 25 years = 300 months
3. 20 years = 240 months
4. 15 years = 180 months
5. 7 years = 84 months
6. 5 years = 60 months
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