May 19, 2024

Jocuri

Mad about real estate

Basic definition of Mortgage with types

In simple defintion, mortgage is a loan taken by buyer from lender against property. A mortgage is the transfer of an interest in property to a lender as a security for a debt – usually a loan of money. While a mortgage in itself is not a debt, it is the lender’s security for a debt. It is a transfer of an interest in property from the buyer to the mortgage lender, on the condition that this interest of property will be returned to the buyer when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower.

Types of Mortgage
There is four type of mortgage instruments are commonly used in the mortgage term in the USA. Below given the details of them –
1. Mortgage
It is the general form of the Mortgage. In few states, a mortgage creates a lien on the title to the mortgaged property. Foreclosure of that lien almost always requires a judicial proceeding declaring the debt to be due and in default and ordering a sale of the property to pay the debt.

2. Security deed
This mortgage instrument only use in the Georgia state. Unlike a mortgage, a security deed is an actual conveyance of real property in security of a debt. Upon the execution of such a deed, title passes to the grantee or lender, however the grantor maintains equitable title to use and enjoy the conveyed land subject to compliance with debt obligations. Security deeds must be recorded in the county where the land is located.

3. Deed of trust
In this type of mortgage a third party is involved in the instrument called trustee.
The deed of trust is a deed by the borrower to a trustee for the purposes of securing a debt. In most states, it also merely creates a lien on the title and not a title transfer, regardless of its terms. The main difference between Mortgage and Deet of Trust is, it can be foreclosed by a non-judicial sale held by the trustee.
The effective difference is that the foreclosure process can be much faster for a deed of trust than for a mortgage, on the order of 3 months rather than a year. Because the foreclosure does not require actions by the court the transaction costs can be quite a bit less. The Deed of Trust mostly found in California state.

The Basic of Mortgage