While mortgages are the most common way of buying a home, it is remarkable how few people actually understand what a mortgage is. A popular term for one is a mortgage home loan although it should never be referred to as a loan because it isn't.
Mortgages are very common these days but the way they work still confuses people or perhaps it is preferable to say that most people only think they know what one is. For one thing, although we commonly call them Mortgage home loans, this is not at all what they actually are; in fact, they aren't loans at all, nor are they something that has been given to you by lenders. The mortgage is a legal contract between the mortgagor who is buying the property and the mortgagee, the person supplying the finance and security against the property. This is in fact the document which ensures the financing of the property is safeguarded until the end of the term, usually twenty five years.
The mortgage has made it possible for people and companies to buy properties with only a small percentage of the purchase price as a deposit. There are also misconceptions about how they work so below is a description of how the process works. Being the financier, the mortgagee is the person who lends funds to the mortgagor or borrower. The security is in fact a lien which means the mortgagee has legal possession of your property until the debt is repaid.
The property you are buying does in fact become collateral for the finance that has been sought to pay for it and is the protection a mortgagee needs if he is going to continue financing house purchases. This lien is recorded within public records likely to be found at a county courthouse or similar establishment. While the property is owned now by the mortgagor, the lien cannot be reversed until the amount specified in the debt is paid off. So how this works is that the mortgagor (you) owns the property completely even though the mortgagee has possession of the mortgage but not the title.
The only right that your mortgage gives to the mortgagee over your property is to sell it to recover funds in the case that you do not pay off your debt. In the unfortunate event that requires the property to be sold or Foreclosed, then the case will need to be presented to the courts for approval. The reason behind this process is to ensure the legal procedures have been followed and also why it is called Judicial Foreclosure. If you were unsure about the definition before and the subject surrounding it, I trust this information has been of use.
