Mortgage defined to its basic definition

Despite increasing numbers of the population having a mortgage, it is amazing how few people actually know what they are and how they work. A mortgage home loan is not for example a standard loan, nor do rules regarding loans refer at all to it. A mortgage is a secured debt using the property that is being purchased as the security for the debt until it is fully repaid. More accurately, it is a document that protects your lender's interest with your property itself and a legal agreement you have provided to a lender.

A mortgage is used as a method by which individuals or businesses can purchase residential or commercial property without paying the full value upfront. Although this article is brief, below are points that will help more in the understanding of how this system operates. Unfortunately it is our own common use of word like Borrower and Lender that has mislead people into thinking a mortgage is a loan when they should be referred to as Mortgagor and Mortgagee respectively. The document itself produces a lien on your property which is not cleared until the debt is paid.

The mortgagee's money is then protected by this knowing the property is in fact security against its own debt. The lien (document) is normally recorded at the local courthouse in the public records section. The lien stays in force while the debt remains but the property is actually owned by the mortgagor. This is a strange situation where the mortgagor still owns the property even though the debt still remains to be paid.

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. If in the unfortunate event this happens, the process whereby the funds are reclaimed is called foreclosure. This is a legally recognized process that must take place often referred to as 'judicial foreclosure'. Obviously there is much more to the subject than this, but these are the basic foundations upon which the mortgaging system has been constructed.

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