A Mortgage can be defined as the transfer of an interest in the specific immovable property to secure the payment of the money advanced by way of loan, an existing or the future debt, or the performance of an engagement which may give rise to a pecuniary liability.
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Mortgage Defined – What are the Parts of a Mortgage?
There are various different parts of the mortgage. The most common of the loan will be paid over a period of time, but that of the upfront cost that comes with buying or purchasing property called a down payment. The following lists are the four (4) components that make up this payment monthly:
The principal is the total amount borrowed. This can make up the bulk of what is owed each month and the higher the principal, the more you own. The type of mortgage is depending, whether the amount may change over time.
Taxes and insurance
Sometimes most of the lenders will have to require the borrower to open an escrow account on the property taxes and insurance. In this way, the owner of the property sets that money aside and doesn’t have to be border about it. It is the lenders that that the responsibility for paying these fees on the borrower’s behalf.
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In order for the exchange of loans, the lender charges a certain amount of interest rate. This amount is what will be included in a monthly mortgage payment in addition to the principal. The interest is profit the bank makes by giving you the loan.
Types of Mortgages
The following are the different kinds of mortgage we have below are the lists;
- Government-backed mortgage.
- Adjustable-rate mortgage.
- Interest-only mortgage.
- Fixed-rate mortgage.
These are the list of types of mortgage.
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Characteristics of Mortgage
- In a situation where the mortgager fails to repay the loans, the mortgagee has the right to recover the debt out of the sales proceeds of the mortgaged property.
- The right possession of the mortgaged property is not necessary to always transferred to the mortgagee.
- The property to be mortgaged must be a specific one (it can be known or identified by the size, boundaries, and location).
- Interest in the mortgaged property is re-conveyed to the mortgage on the repayment of the loan with the due interest on it.
- Mortgage can have an effect only on the immovable property; the immovable property includes land, benefits that arise of the things attached to the earth like the trees, buildings, and machinery. Although the machine is not permanently fixed to the earth and is also shiftable from one location to the other.
These are the characteristics of mortgages.