Mortgage defined to its basic definition
Rick Gomez
Mortgages are more commonplace now than ever before but most people that have them really don't fully understand what they are. A common misconception is that a Mortgage is a Home Loan but this is false and people need to be educated about the fact that it is not a loan at all. The borrower who is also called the mortgagor and uses a mortgage to pledge real property to the lender, also called the mortgagee, as security against the debt for the rest of the value of the property. This legal agreement is a way to protect the lender from loss by having the very item (house) used as security against defaulting.
A mortgage is used as a method by which individuals or businesses can purchase residential or commercial property without paying the full value upfront. Although this article is brief, below are points that will help more in the understanding of how this system operates. Unfortunately it is our own common use of word like Borrower and Lender that has mislead people into thinking a mortgage is a loan when they should be referred to as Mortgagor and Mortgagee respectively. The document itself produces a lien on your property which is not cleared until the debt is paid.
The mortgagee's money is then protected by this knowing the property is in fact security against its own debt. The lien (document) is normally recorded at the local courthouse in the public records section. The lien stays in force while the debt remains but the property is actually owned by the mortgagor. This is a strange situation where the mortgagor still owns the property even though the debt still remains to be paid.
The only right that your mortgage gives to the mortgagee over your property is to sell it to recover funds in the case that you do not pay off your debt. If in the unfortunate event this happens, the process whereby the funds are reclaimed is called foreclosure. This is a legally recognized process that must take place often referred to as 'judicial foreclosure'. Obviously there is much more to the subject than this, but these are the basic foundations upon which the mortgaging system has been constructed.
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