Mortgage Definition - It May Not Be What you Think
Are you buying a new house? If so and if you are like most people, you will need the services of a lender...I can suggest a few goods ones that will work hard for you. Sooner or later the "M" word will be used...and exactly what does Mortgage mean?
Merriam-Webster defines Mortgage as:
"A legal agreement in which a person borrows money to buy property (such as a house) and pays back the money over a period of years".
I think most people have this understanding of what a mortgage is, and M-W goes on to say : "a conveyance of or lien against property (as for securing a loan) that becomes void upon payment or performance according to stipulated terms", also, "the instrument evidencing the mortgage". So far so good, but before I give you Merriam-Webster’s second definition let me ask you a question; Who is giving whom a mortgage? The bank is giving a buyer a mortgage on the home they want to buy…right? WRONG!
Merriam-Webster’s second definition is: "to give someone a legal claim on property that you own in exchange for money that you will pay back over a period of years".
Any clearer now? The buyer is giving the party (loaning the money) a legal claim on that property securing the debt. The buyer is voluntarily placing a lien on their own property in favor of the creditor should the buyer default. So what actually is taking place is that the buyer is “giving” the creditor (typically a bank or lender) a mortgage. The lender is the “mortgagee while the buyer is the “mortgagor”.
I found this great HUD web portal that lists most real estate terms in use and gives definitions.
Content originally published at....http://nicktpappas.com/?p=2194
image courtesy Stuart Miles/freedigitalphotos.net
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