Mortgage Loan
A mortgage loan is nothing more than a real estate debt instrument. Acquiring a mortgage loan is the most common method of financing a home in America. The benefits are tremendous and the availability of it is dictated both by the risk the borrower presents to the lender, and the present moment of the country’s economy.
Here’s the play-by-play to better visualize the whole idea of a mortgage loan:
Jerry wants to buy a house that costs $200,000. But he doesn’t have 200k to spend at once - or he does but spending that amount of money will damage his cash flow. Because he doesn’t want to have a house but live miserably – plus, every new house comes with hidden costs…- he goes to a mortgage lender to ask for a mortgage loan.
The lender checks Jerry’s credit score and puts it against the price of the house to figure out if they are willing to take the risk on Jerry’s dream and financial health. If they are, then the mortgage loan is on. They will pay the $200,000 directly to the home seller and sign a contract with Jerry to allow him to move the home, that is “jointly owned” by the bank and Jerry. Now, every month, Jerry has to pay a certain amount of money combined with a specified (and agreed by contract) amount of interest that is deducted from the total amount. With every payment, Jerry acquires more equity to the home.
If everything goes along smoothly, Jerry pays the mortgage loan in its entirety, erases his debt, and the house becomes 100% his, thank you very much mortgage lender bye-bye.
However, if it doesn’t… big problems ahead.
A mortgage loan basically means that, as collateral, is the house itself. If something happens and Jerry defaults too much and fails to terminate his debt in a timely manner, the house goes in foreclosure and heads to auction so the lender can return its investment, and Jerry – having paid from 1% to 99%; doesn’t matter – loses everything.
Real Estate tip:
Here’s a great sort of mortgage loan: we will give you the best local real estate agents and you’ll give us… well, nothing because The OFFICIAL Real Estate Agent Directory® is 100% FREE! So I guess it’s not a mortgage loan after all, right? It’s just amazing. Yeah, we think so too. Enjoy!
Popular Real Estate Terms
An agreement occurring from actions of those impacted, but not communicated in writing or orally. For example, it is presumed that a real estate agent will perform his or her obligations ...
An agreement by which a mortgage is made subject to a junior mortgage. For example, a loan on a vacant lot is made subject to a subsequent construction loan. ...
Said of property that is bought subject to the existing loan against it. ...
Legal record used to create a condominium. It encompasses the description of the property, common elements, ownership units, and acceptable uses of the residence. ...
Precisely the optimum location for a retail business establishment in an urban central business district (CBD). A one-hundred-percent-location normally is a square block or intersection in ...
(1) Method of measurement lumber using the board foot cubic measure. The board measure is used to estimate quantities and prices of lumber materials. (2) Method of estimating lumber ...
Lienholder's statement as to the unpaid balance on a trust deed note. ...
Local group of real estate brokers who are members of the State and National Board of REALTORS®. Meets regularly with their membership and helps determine licensing requirements as well as ...
Same as term lateral support: The right of a landowner to have lateral land support from adjacent properties. The right of lateral and subjacent support means that an adjacent land owner ...
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