A mortgage loan is a loan secured by real estate owned by the borrower, in which the borrower grants the lender a lien, or mortgage, against the property. A mortgage will remain a lien against the property until paid, or until the mortgage holder releases the mortgage in writing.
THE BASICS OF MORTGAGE LOANS
Mortgage loans are a basic and vital part of real estate transactions. Since people rarely have the immediate liquid resources to pay for real estate, they usually borrow money from a lender for most of the purchase price. Because the lender is providing immediate cash available to be paid back over a long period of time, the lender needs security or collateral for its investment with the borrower. The land purchased by the borrower provides the most sense and safest type of security for the lender.
When you obtain a mortgage loan, you will sign a promise to repay the amount borrowed, according to the terms of the loan. You will also sign a mortgage, giving the lender a lien or security on the property. In the event you do not pay back the loan, the lender, through the mortgage, is given the right to sell the property to complete repayment of the loan. If there is more than one mortgage, the first mortgage is paid before any secondary mortgages are paid.
The lender will not own the property through a mortgage loan only retain a lien on the property. You are generally free to do with the property as you wish, except that transferring the property without paying off the mortgage is usually prohibited without the mortgage holder’s permission.
TYPES OF MORTGAGE LOANS
Mortgage loans come with many different terms, conditions and methods for the payment of interest. Some will retain a single interest rate for the entire term of the mortgage, called fixed rate mortgages some will provide that the interest will fluctuate based on the market, called adjustable rate mortgages. Some provide for short terms, as little as one year, or they may be as long as ten or more years. Most mortgage loans allow an amortization period of up to 35 years.
Because there is such an array of mortgage products available, expert mortgage professionals at First Foundation can assist you in selecting the mortgage loan product that best suits your needs. Please call today to discuss your needs with a mortgage professional.
If you are interested in learning more about mortgage loan, please feel free to contact us today!