A simple definition of a mortgage is a type of loan you can use to buy or refinance a home. Mortgages are also referred to as “mortgage loans.” Mortgages are a way to buy a home without having all the cash upfront.
A mortgage is a way to use one's real property as a guarantee for a loan to get money. ... When the mortgage transaction is made, the debtor gets the money with the loan, and promises to pay the loan. The creditor will receive money back with interest over time (usually in payments made each month by the debtor).
A mortgage is a way to use one's real property as a guarantee for a loan to get money. Real property can be land, a house, or a building. Many people do this to buy the home they use for mortgage: the loan provides them the money to buy the house and the loan is guaranteed by the house.
In a mortgage, there is a debtor and a creditor. The debtor or mortgagor is the owner of the property, while the creditor or mortgagee is the owner of the loan. When the mortgage transaction is made, the debtor gets the money with the loan, and promises to pay the loan. The creditor will receive money back with interest over time (usually in payments made each month by the debtor). If the debtor does not pay the loan, the creditor may take the mortgaged property in place of the loan. This is called foreclosure.
In the 2008 American economic failure, creditors lent money to debtors who could not pay back that money. This lowered housing prices and hurt the economy.
Types of mortgage
Simple mortgage
Defined under Section 58(b) of the Indian Transfer of Property Act as a simple mortgage is a transaction whereby ‘without delivering possession (ownership or occupancy) of the mortgaged property, the mortgagor binds himself personally to pay the mortgage money and agrees, expressly or implicitly, that in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold by a decree (an order of law) of the court in a suit(a case in a law court) and the proceeds of the sale to be applied so far as may be necessary in payment of the mortgage money; there is no foreclosure of the mortgaged property. Normally a mortgage is to be registered if the mortgaged money is Rs.100 or more. Mortgage deed is to be executed and appropriately stamped ad valorem with two best available witnesses.
It can be said generally when the possession of the mortgaged property is not delivered, the transaction is simple mortgage.
English mortgage
A mortgage has a product term and a mortgage term, the mortgage term is the total amount of time you will have the mortgage (typically 10 to 25 years) where the product term is how long you will be tied into a fixed rate (normally 2 to 5 years) The borrower promises to repay the borrowed money on a certain date and if it is a repayment mortgage will have cleared the mortgage in full by the end of the mortgage term. The borrower transfers the property to the lender. The lender will re transfer the property when the money is repaid when the mortgaged property is absolutely transferred to the mortgagee. The land registry holds information on who owns a property and which properties have charges outstanding on them.
English mortgage is a type of mortgage where the ownership of property is transferred to the mortgagor on a condition that the mortgagee will transfer the ownership on repayment of the loan, the title deeds are transferred to the mortgagee.
Reverse mortgage
A reverse mortgage is a loan where the lender pays the monthly instalments to the borrower instead of the borrower paying the lender. The payment stream is reversed. A reverse mortgage allows people to get tax-free income from the value of their home. They are mainly to improve older people's personal and financial independence.
Usufructuary mortgage
In this form of mortgage, the property is given as a security to the mortgagee, who is let into possession or is permitted to repay himself out of the rents and profits of such property. Following Two points should be noted carefully with respect to Usufructary mortgage, that is (i) Possession must be given to the mortgagee, or the mortgagor must expressly or impliedly bind himself to deliver possession and (ii) The mortgagor will not be personally liable, unless there is a distinct agreement to the contrary.
Mortgages come in a variety of forms. The most common types are 30-year and 15-year fixed-rate mortgages. Some mortgage terms are as short as five years while others can run 40 years or longer. Stretching payments over more years may reduce the monthly payment, but it also increases the total amount of interest the borrower pays over the life of the loan.
The following are just a few examples of some of the most popular types of mortgage loans available to borrowers.
Fixed-Rate Mortgages
With a fixed-rate mortgage, the interest rate stays the same for the entire term of the loan, as do the borrower's monthly payments toward the mortgage. A fixed-rate mortgage is also called a traditional mortgage.
Adjustable-Rate Mortgage (ARM)
With an adjustable-rate mortgage (ARM), the interest rate is fixed for an initial term, after which it can change periodically based on prevailing interest rates. The initial interest rate is often a below-market rate, which can make the mortgage more affordable in the short term but possibly less affordable long-term if the rate rises substantially.
ARMs typically have limits, or caps, on how much the interest rate can rise each time it adjusts and in total over the life of the loan.
Interest-Only Loans
Other, less common types of mortgages, such as interest-only mortgages and payment-option ARMs, can involve complex repayment schedules and are best used by sophisticated borrowers.
Many homeowners got into financial trouble with these types of mortgages during the housing bubble of the early 2000s.
Reverse Mortgages
As their name suggests, reverse mortgages are a very different financial product. They are designed for homeowners 62 or older who want to convert part of the equity in their homes into cash.
These homeowners can borrow against the value of their home and receive the money as a lump sum, fixed monthly payment, or line of credit. The entire loan balance becomes due when the borrower dies, moves away permanently, or sells the home.
The lender takes the property. The lender receives income from the property (rent, profit, interest, etc.) until the money is paid back. The owner keeps the title deeds with him.
In this page you can discover 29 synonyms, antonyms, idiomatic expressions, and related words for mortgage, like: lease, amortize, deed, title, contract, encumbrance, debt, lien, hock, transactions and loan.
What Is a Mortgage?
The term mortgage refers to a loan used to purchase or maintain a home, land, or other types of real estate. The borrower agrees to pay the lender over time, typically in a series of regular payments that are divided into principal and interest. The property serves as collateral to secure the loan. A borrower must apply for a mortgage through their preferred lender and ensure they meet several requirements, including minimum credit scores and down payments. Mortgage applications go through a rigorous underwriting process before they reach the closing phase. Mortgage types vary based on the needs of the borrower, such as conventional and fixed-rate loans.
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