Mortgages

Posted on October 28, 2007
Filed Under Home Loans | Leave a Comment

Mortgages and Home Loans are synonymous. Mortgages are Home Loans. Mortgages can be a 1st Mortgage or a 2nd or 3rd Mortgage. When a homeowner takes out a home loan they are really putting a mortgage on their home. Mortgaging a home is another term that is used when a home loan is created.

For a more accurate definition of a Mortgage – mortgages are not home loans but rather an instrument that is created where the mortgagor (homeowner) gives the lender (mortgagee) a mortgage – a security instrument that is recorded at the court house. If the Mortgagor does not make payments on the loan the mortgagee may foreclose on the home. The mortgagor retains full ownership of the home while making the mortgage payments. Over 50% of states use mortgages.

The remaining states use a deed of trust which accomplishes the same purpose but has distinct differences. With a deed of trust there are 3 parties: trustor (the homeowner), trustee (3rd party and holds temporary ownership but not full title till loan is paid off) and beneficiary (lender). If the homeowner defaults on the mortgage payment the lender provides the trustee with proof of delinquency and orders the trustee to initiate the foreclosure proceedings.