03 Feb 2017

What is Mortgage?

Answer No. 1
A mortgage is defined in the Alberta Land Titles Act as a charge on land created merely for securing a loan or debt. In other words, Mortgage Company or a bank lends you the money to buy your house and you in return sign documents which are registered on your home promising to repay them. The owner of the land, are called the “mortgagor” and the lender as the “mortgagee”. If you default on your mortgage, the home will be repossessed to repay the loan, through a legal procedure called foreclosure. There are other types of mortgages as equitable mortgage and common law mortgages, but most purchasers will be obtaining the type of statutory mortgage described by the Land Titles Act.

Answer No. 2
The mortgage is defined as a legal agreement by which building, society, bank, etc. lends money at interest in exchange for taking the title of the debtor’s property, with the condition that the conveyance of title becomes void upon the payment of the debt. For example, “I put down a hundred thousand as cash and took rest as a mortgage”. The mortgage is a property to a creditor as security for a loan. Mortgages make the large purchase possible for individuals lacking enough cash to purchase an asset, like a house.  Lenders carry a risk making these loans as there is no guarantee the borrower will be able to pay in the future. Borrowers take the risk in accepting these loans, as a failure to pay will result in a total loss of the asset. Home ownership has become a cornerstone of the American Dream. For most people, their house is the most valuable asset. Mortgages make home buying possible for many Americans. Mortgages are not always easy to keep, however, as terms and rates are often dependent on an individual’s job status. Failure to repay the loan to the bank allows it to legally foreclose and auction off the property to cover bank losses.

Answer No. 3
The mortgage is a loan in which a person can borrow cash as a loan. The borrower enters into an agreement with the lender (usually a bank) wherein the borrower receives cash then makes payments over a span of time until he pays back the lender in full. These loans are usually entered by home buyers who don’t have enough cash on hand to purchase the home. There are various types of mortgage loans and buyers should know what is best for their own situation before entering into one. The types of loans are characterized by their interest rates, term dates, and a number of payments per period. Mortgages are like any other financial product in that their supply and demand will change according to the market. For that reason, sometimes banks can offer very low-interest rates and sometimes they can offer high rates. If a borrower agreed upon a high-interest rate and finds after a few years that rates have dropped, he can sign a new agreement at the new lower interest rate after jumping through some hoops. This is called “refinancing”.

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