Welcome to Mortgage Guide
Mortgage Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Basic Mortgage Loan Information
from:Many professionals take the information that they have at their fingertips for granted. Consumers may require some basic information about a mortgage loan before making any rash decisions. Simply providing a clear definition and outlining the participants can help potential homebuyers make the most of their experience.
What is a mortgage loan? This question is not often asked by consumers. However, some homebuyers may not have a full understanding of this type of debt. Professionals in the field often forget that the consumers are not as well informed as they should be.
Mortgage Loan Basics
A mortgage is a type of loan that uses property to secure the debt. This property does not have to be a home in the fundamental meaning of a mortgage. Traditionally, the term was used to refer to various items bought with credit including ships and jewelry. The term basically referred to using collateral to assure that the debt would be paid in a timely manner.
The word comes from the French, meaning “dead pledge.” This somber definition conveys the seriousness of the promise and it also has some legal undertones as well. A mortgage loan is a legal contract that uses the property in question as collateral.
Today, the mortgage loan is strongly tied to residential and commercial real estate property. In a nutshell, consumers can reside in a home or conduct business in a building without paying for the real estate up front. The mortgage loan is used to provide instant access with the requirement of timely payments.
The Participants
Of course, a mortgage loan is not a solitary venture. There are various participants in the process. One of the most important contributors is the creditor. The creditor, or lender, maintains legal rights to the money owed for the property.
Basically, the creditor owns the mortgage and has right to the property if the debt is not paid as agreed. Banks and other lending institutions are typical lenders that make funds available for consumers so they can purchase property. These organizations are also known as the mortgagee, lender or beneficiary.
In contrast, the debtor is the individual borrowing the funds to pay for the property. This individual is required to make installment payments in order to pay off the mortgage loan within a specified period of time. After the debt is paid in full, the debtor becomes the owner.
Failure to hold up to the obligation may result in foreclosure. The creditor owns the mortgage until it is paid in full. The homebuyer may revoke his right to the property if he fails to keep his end of the bargain. The debtor is also expected to pay interest on the loan, making the venture profitable for lender.
A mortgage agreement is a complex exchange that is legally binding. Legal representation is often necessary in the process as well. Other participants can include mortgage brokers and financial advisors. Each individual has an important role in the proper development of a mortgage loan.
Mortgage News
Lawmakers set new mortgage bankruptcy bill (Washington Post)
WASHINGTON (Reuters) - Legislation designed to stem foreclosures by allowing bankruptcy judges to erase some mortgage debt will be introduced by Congressional Democrats on Tuesday, and hopes are high that it will pass after a similar plan failed last year.
Read more...NY Fed begins purchasing mortgage securities (AP via Yahoo! News)
The Federal Reserve Bank of New York said Monday it has begun purchasing mortgage-backed securities in an effort to bolster the battered housing market.
Read more...Fed starts program of purchases of mortgage securities (AFP via Yahoo! News)
The Federal Reserve said Monday it began buying troubled mortgage securities through investment managers, kicking off a program expected to spend up to 500 billion dollars to ease a credit crisis.
Read more...Non-Agency Mortgage Bonds Rallied as Rates Declined (Update2) (Bloomberg)
Jan. 5 (Bloomberg) -- U.S. mortgage bonds without government support rose last month, as efforts by the Federal Reserve and Treasury Department to lower home-loan rates boosted investor demand.
Read more...New York Fed Begins Purchases of Agency Mortgage Debt (Update3) (Bloomberg)
Jan. 5 (Bloomberg) -- The Federal Reserve Bank of New York started buying mortgage-backed securities today as part of a $500 billion program to support the U.S. housing market.
Read more...