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A-Mortgage-Loan-Is-A-Loan-Secured-By-Real-Property242 A-Mortgage-Loan-Is-A-Loan-Secured-By-Real-Property242 Document Transcript

  • A mortgage loan is a loan secured by real property through the use of a
  • mortgage note which evidence of the loan and the encumbrance of thatrealty through the granting of a mortgage which secures the loan Wordmortgage is a law french term meaning death contract meaning that thepledge ends when either the obligation is fulfilled or the property is takenthrough foreclosure A mortgage loan is a loan secured by real propertythrough the use of a mortgage note which evidence of the loan and theencumbrance of that realty through the granting of a mortgage whichsecures the loan Word mortgage is a law french term meaning deathcontract meaning that the pledge ends when either the obligation isfulfilled or the property is taken through foreclosure Accroding to angoamerican property law, a mortgage occurs when an owner pledges his orher interest as security or collateral for a loan
  • Therefore a mortgage is an encumbrance on the right too the propertyjust as an easement would be, but because most mortgages occur as acondition for new loan money, the word mortgage has become thegeneric term for a loan secured by such real property Many otherspecific characteristics are common to many markets, but the above arethe essential features Governments usually regulate many aspects ofmortgage loan, either directly or indirectly and often throug stateintervention Other aspects that define a specific mortgage market maybe regional, historical, or driven by specific charachetistics of the legal orfinancial system Lenders provide funds against property to earn interestincome, and generally borrow these funds themselves
  • The price at which the lenders borrow money therefore affects to cost ofborrowing Lenders may also in many countries, sell the mortgage loan toother parties who are interested in receiving the stream of cash paymentsfrom the borrower, often in the form of a security Ther are many types ofmortgages used worldwide, but several factors broadly define thecharacteristics of the mortgage All of these may be subject to localregulation and legal requirements
  • Interest may be fixed for the life of the loan or variable and change atcertain pre defined period the interest rate can also of course be higher orlower Term mortage loans generally have a maximumterm, that is thenumber of years after which an amortizing loan will be rapid Somemortgage loans may have no amortization, or require full repayment ofany remaining balance at a certain date or even nagaive amortizationUpon maning a mortgage loan for the purchase of a property, lendersusually require that the borrower make a downpayment, that is contributea portion of the property
  • This downpayment mey be ecpressed as a portion of the value of theproperty The loan to value ratio is the size of the loan against the valueof the property Therefore, a mortgage loan in which the purchaser hasmade a downpayment of 20% has a loan to value ratio of 80% For loansmade properties that the borrower already owns, the loan to value ratiowill be imputed against the estimated value of the property
  • In most countries a number of ore or less standard measures ofcreditwotthiness may ne used Common measures include payment toincome and various net worth measures In many countries cradit scoresare used in lieu of or to supplementthese measures Article Tags: