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Mortgage Law

A mortgage is a security interest in real property held by a lender as a security for a debt, usually a loan of money.

Wikipedia

Mortgage is a legal document by which the owner or the buyer transfers to the lender an interest in real estate to secure the repayment of a debt, evidenced by a mortgage note. It is the universal method of financing real estate transactions.

A mortgage involves the transfer of an interest in land as security for a loan or other obligation. It is the most popular method of financing real estate transactions. The mortgagor and the mortgagee generally have the right to transfer their interest in the mortgage.

The mortgagor is the party who borrows the money and gives the mortgage. The mortgagee, usually a financial institution, is the party who pays the money and receives the mortgage.

Not all mortgages are created equal, and it’s important that you understand exactly how they differ before signing on the dotted line. The two main types of home loans are fixed-rate mortgages and adjustable rate mortgages.

Fixed-rate mortgage is more stable, as the rate stays the same throughout the entire life of the loan. Many lenders offer fixed rates for two, three or five years, sometimes longer. The benefit of a fixed-rate mortgage is that it helps you to budget more easily, because your interest rate will stay the same for the length of the deal.

Adjustable rate mortgage is subject to fluctuations in rates. It is more accessible to borrowers and allows more people to experience home ownership. However, since the rate is tied to the prime rate, it can either go up or down, which makes it kind of a gamble for many homebuyers. So it can be unreliable.

Mortgages loans vary widely in terms of amount, repayment terms, interest rates, and other provisions. It is quite common to mortgage the purchase of almost any real property, as few individuals have sufficient savings to make such a large purchase on their own. Mortgage loans are also frequently used to access equity in a property, or the difference between the value of the land and the amount financed. These are often called second mortgages or home equity loans.

In most cases, the down payment for a mortgage will be around 20% of the cost of the house. A larger down payment may qualify you for a larger loan.

The mortgage must be executed according to the formalities required by the laws of the state where the property is located. It must describe the real estate and must be signed by all owners, including non-owner spouses if the property is a homestead.

If you have questions pertaining to mortgage basics or need legal assistance with your mortgage related issues, ask your agent or speak with a real estate attorney.

About the author

Thomas Elliott

Education: Brooklyn Law School, Brooklyn, New York. Pace University, White Plains, New York.
Professional Associations and Memberships: American Bar Association, New York State Bar, The Association of the Bar of the City of New York, Brooklyn Bar Association, National Academy of Elder Law Attorneys (NAELA).

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