Today in infoclick1 we will discuss about the very important topic Mortgage .A mortgage is a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses to make large real estate purchases without paying the entire purchase price up front. Over many years, the borrower repays the loan, plus interest, until he or she owns the property free and clear. Mortgages are also known as “liens against property” or “claims on property.” If the borrower stops paying the mortgage, the lender can foreclose.
BREAKING DOWN Mortgage
In a residential mortgage, a home buyer pledges his or her house to the bank. The bank has a claim on the house should the home buyer default on paying the mortgage. In the case of a foreclosure, the bank may evict the home’s tenants and sell the house, using the income from the sale to clear the mortgage debt.Mortgages come in many forms. With a fixed-rate mortgage, the borrower pays the same interest rate for the life of the loan. The monthly principal and interest payment never changes from the first mortgage payment to the last. Most fixed-rate mortgages have a 15- or 30-year term. If market interest rates rise, the borrower’s payment does not change. If market interest rates drop significantly, the borrower may be able to secure that lower rate by refinancing the mortgage. A fixed-rate mortgage is also called a “traditional.
A loan is a relationship between a lender and borrower. The lender is also called a creditor and the borrower is called a debtor. The money lent and received in this transaction is known as a loan: the creditor has “loaned out” money, while the borrower has “taken out” a loan. The amount of money initially borrowed is called the principal. The borrower pays back not just the principal but also an additional fee, called interest. Loan repayments are usually paid in monthly installments and the duration of the loan is usually pre-determined. Traditionally, the central role of banks and the financial system was to take in deposits and use them to issue loans, thus facilitating efficient use of money in the economy. Loans are used not just by individuals but also organizations and even governments.
MORTGAGE AND LOAN.
Mortgages are secured loans that are specifically tied to real estate property, such as land or a house. The property is owned by the borrower in exchange for money that is paid in installments over time.
Relationship between lender and borrower. Lender is also called a creditor and the borrower is a debtor. Money lent and received in this transaction is known as a loan: the creditor has “loaned out” money, while the borrower has “taken out” a loan.