Mortgage loans are the loans obtained for the purchase of property or for the purpose of refinances obtained from the mortgage brokers, banks, property owners or from online lenders. Such mortgage loans are generally long term loans where the contact may normally exist for 15 years or 30 years. The mortgage loans may be obtained either directly or through intermediaries.
There are certain important terms, which are required to be known under mortgage loans:
Property: the land, residence, or building over which the contract is entered into.
Mortgage: the lender creates certain security restrictions such as payment of outstanding debts before selling the property.
Lender: the bank or the financial intermediaries.
Borrower: the person obtaining the mortgage loan.
Interest: charges obtained for using the lender’s finance.
Foreclosure: this is a very essential element in case ant defaults in the payments are being made and the lender has the right to seize the property.
When a mortgage loan is closed, the mortgagee needs to sign documents such that the mortgager has a lien against the mortgaged property. If the borrower fails to make the payments, the lender has every right to take over the property by the foreclosure process.
In certain situations, the borrower needs to pay to the lender some extra payment apart from that of the principle and interest for the mortgage loans take. Such extra charges may be for the 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 principle and interest. Such amount, which is collected monthly, is placed in an account called escrow account and the payment of taxes and insurance are made annually when required. There are many types of mortgage loans, which vary according to different characteristics.