Homeowner Forum / General / May 2008

Although many go house hunting, and house buying, it is amazing how
few people actually know what a mortage is and how a mortage works. It
is also not uncommon for many to mis-label their mortage and instead
call it a home loan. However, that term is totally misleading and
inaccurate. The mortgage is basically a way of securing a debt to
which the property is the security. In reality, this is not a true
debt; instead it is the security required by the lender to protect
their interests for the duration of the term of the loan.

Mortgages have in fact changed the face of house buying. A mortgage
gives one access to purchase without the buyer having to pay the full
cost upfront. To help understand how this works, some important
information is discussed here. Being the financier, the mortgagee is
the person (or institution) doing the lending to you, the mortgagor or
borrower. Your home, the security, is in fact a lien which means the
mortgagee has legal possession of your property until the debt is
repaid.

The property you are buying does in fact become collateral for the
finance that has been sought to pay for it. The property itself is the
protection a mortgagee needs if he is going to continue financing
house purchases. The lien (a written document) is normally recorded at
the local courthouse in the public records section. This is now a
recorded legal agreement and cannot be reversed until the full balance
of the debt is cleared. What this means is that even though the
mortgagee has possession of the mortgage, he is not the owner of the
property nor does he have the title.

However, you do have legal rights to the property. The only way the
mortagee can sell said property would be in the event that you stop
making payments. Should that happen, the house would be sold off to
repay the finance used to purchase it. This process has many names; in
the United States, it is referred to as foreclosure.

One thing individuals house hunting should always do, and though
obvious bears writing, is to shop around for the best financial
institution to handle your mortgage. Considering all your options
prior to signing on the dotted line, can save you shock and potential
headaches in the years to come. Always take your time and read all
your loan documents, yes even the fine print, to make sure you know
your financial obligations upfront.

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Janet Giacoma provides home business direction and mortgage solutions
to keep you on track and making money for years to come. Stop by The
Abundant Alliance and say hello. http://www.TheAbundantAllianceBlog.com