Real Estate Financing...

Mortgages are as common as Turkey on Thanksgiving, yet as misunderstood or not understood at all by the laymen in our fast-paced, zoom-zoom, world we live in.   In fact, I graduated college and didn't even know what a mortgage was at that point.  As common as mortgages are, there are a surprisingly large number of us who are mistaken about how they work, and what they actually are. For one thing, though we do commonly think of mortgages and "Home Loans" as one in the same, this is not at all what they actually are. Mortgages aren't loans, nor are they something that have been given to you by lender or bank or got you that bulk sum of money to purchase or refinance that roof above your head. In reality, a mortgage is a security instrument that you have provided to a lender. It is a document recorded at the courthouse or other like establishment protecting the lender with the collateral of the property itself.

A mortgage functions in the following way:

- A mortgager (you) - also referred to as a borrower and the mortgagee, who is also called the lender.

- The mortgage document itself produces a lien on your property.  A lien on your property is the only thing separating you from owning your humble abode free & clear, AKA no payment! This is the collateral - the security - for the mortgagee who has provided the security instrument. This lien is recorded within public records - likely at a county courthouse or similar establishment.

- Ownership of the property is then in your hands and cannot be transferred to anybody until you have paid off in full the amount required to reverse the lien.  This means a relative, good buddy, or new found love interest, can't 'assume' the mortgage and take on the debt of that loan unless they either are on the loan or are refinanced into their name as well.

- Even if your property is mortgaged, you still own the property wholly and completely. Nobody else, not your neighbor Joe, the Mayor, the head of the schoolboard,  not even the mortgagee has title to the property.

- 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. This is the nightmare of nightmares as far as financial disarray.  In our industry, it is simply called a foreclosure.  Avoid it like the plague.

- Should the mortgage be used for security, then the foreclosure must progress through the court system in order to be legal in the majority of circumstances. This type of foreclosure is referred to as a judicial foreclosure.

Catching up on the in's and out's of mortgages, financing, buying & selling homes, and all that is encompassed therein can be a complicated process.  After all, most people only buy a home a few times in their lifetime and go through the process a handful of times.  The real key for consumers to get a better handle on this industry, any industry in fact, is to have a familiarity with the jargon involved.  This will ease any intimidation factor going on and allow you to make informed decisions and fair assessments of the process in whole.  And with the implemenation of the world wide web, sites like Active Rain and others offer the information for the taking.  All you got to do is find it.