A mortgage loan ( also called a mortgage) is used by real estate buyers in order to get funds to buy real property.
It is also possible for the current property owner to get financing f, while putting a lien on the real property being mortgaged.
Mortgage origination is used to “secure” the loan on the borrower’s real property. If the borrower fails to make payments on a loan, it allows the lender to take possession and sell the property to pay the loan off.
Mortgage borrower can be:
- Individual home buyer, who is getting mortgage for the personal home.
- Business, which is getting mortgage commercial property (for example, investment retail building, or residential property to rent for tenants).
The lender is usually a financial institution, such as a bank, or credit union.
Mortgage loan has various features and characteristics:
- size of the loan,
- maturity of the loan,
- interest rate,
- method of paying off the loan.
If the borrower claims bancruptcy and fails to pay the mortgage, the mortgage lender is repaid first with the money from the sale of the real property. Then the other creditors are paid from the left of the proceeds from the sale of the secured property.