What Is A Mortgage?

By Author: Mutual Mortgage
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Nearly every article referencing home ownership and finances note that most Americans do not fully understand home values, mortgages, and other terms and issues relating to the mortgage lending process. And, nearly every article attempting to explain these issues never really clears any confusion. It’s as if you have to have an advanced financial degree and/or years of industry experience to really comprehend what’s going on. Furthermore, laws constantly change, interest rates continually fluctuate, the housing market always changes, and outside factors frequently affect home values (road and transportation upgrades, new construction). As well, unforeseen events impact matters. The current pandemic alone affected people’s ability to pay mortgage premiums and the mortgage rate.

So, let’s simplify the mortgage lending process. This will be the first in an ongoing series of blogs that does just that.

What is a Mortgage?

A mortgage is a loan that the borrower uses to specifically buy property (land, home, or some other kind of real estate). Because mortgages involve property, they naturally ...
... involve large dollar amounts. The borrower uses the property to secures the loan (collateral). This means that if the borrower does not repay the loan, the mortgage lender can foreclose the property, meaning it can assume ownership of the property and resell it.

Because collateral (the property) protects lenders and debtors should a borrower default (i.e., it ensures that they will be paid), mortgages are secured loans. This protection allows mortgage rates and payment times to typically be lower and shorter than other kinds of loans.

Unsecured loans, such as personal loans, have no backing collateral (they also generally do not involve the same high dollar amounts). If the borrower defaults, the guarantor will be responsible for repayment, or the lending institution can pursue legal action against the borrower. Remedies then usually include wage garnishment or whatever other remedies the state laws allow.

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Mutual Mortgage Lending Corporation's wants its clients to pay less and get more. It dedicates its resources to both residential and commercial clients. It has expert loan officers for first time buyers in Florida, VA, FHA and conventional loans as well as Reverse mortgage in Florida – for all your mortgage needs.

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