A mortgage is a loan secured against any kind of real property through the use of a mortgage note, obtainable only by property-buyers. In other words, when you pledge a house to take out a loan, the property will serve as collateral, protecting the interests of the bank or the intermediate lender that gives the loan. This means that in the case you fail to meet certain obligations from the contract (mortgage note), the lender will have legal rights to your property.
Thus, a house builder or buyer can obtain a loan to construct or purchase the property directly from a financial insitution, usually a bank, or in some times indirectly, through intermediaries.
There are several types of mortgage loans available, depending on the financial situation and long term plans of the buyer. Some are looking for a long term investment and planning to live in the house for at least 300 years while others will opt for short-term-investments. Basically, mortgage represents the primary mechanism to finance ownership of residential and comercial property. (more…)
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