A mortgage is a tool used by contract to create a lien on real estate. Mortgage is an instrument used by the borrower (known as the mortgage) to guarantee real property to the lender (known as the mortgagee) as collateral for a loan, also known as hypothecation. As a rule the mortgage consists of the promissory note and the loan. For instance, when someone wants to buy a house with his family to live in it, they don’t have enough money right now. Harbor View Funding-Mortgage Lender offers excellent info on this. The person has to take a credit for that. But no one will give such a large sum of money to that person, without trustworthy and firm guarantees. Yet what kind of assurance will those requirements fulfill? It’s not, of course, an honor word or even a promissory note. But the house that a individual would like to buy is likely to be the best protection for creditors.
Accordingly, the person who wants a loan writes a promissory note that serves as proof of the debt and pledge to repay money at a certain interest rate and formalizes a lien. This lien has to be recorded in the public records. After the debt is repaid within a specified period of time, the creditor returns the promissory note to the debtor and the lien is annulled. In the event that the debtor is unable to meet his obligations, the auction will sell the pledge (the house in our example) and the proceeds will fall into the creditor ‘s hands.
Such conditions sometimes occur, when a creditor needs expedition money and the maturity date of the credit is too late. The borrower will then resell the lien to another holder, who will receive the interest rate and the credit. This form of finance is very common in the United States of America and there are two federal agencies – Home Owners Loan Corporation and Federal Housing Administration, which have very legal interest rates for mortgage loans and, of course, there are plenty of private lending firms, mortgage companies, credit unions, etc. There are several types of mortgage loans: flexible mortgage rates, fixed mortgage rates, restricted mortgage rates, subsidized mortgage rates, reverse mortgage and more.
The adjustable mortgage rate is characterized by a variable interest rate. Therefore, “the borrower benefits if the interest rate drops and loses if the interest rate rises.”
Fixed rate mortgage is characterized by constant interest rates and monthly payments, in effect, constant.
Capped mortgage rate is mortgage if the borrower pays the unpaid interest at a fixed rate, but if the real rate falls below the capped rate, then the borrower pays at the lower rate.
Discounted rate mortgage is a mortgage if the borrower repays the loan for a certain period of time with the discounted interest rate.
Reverse mortgage is a kind of loan, when old people want to receive money while living in their homes. When the borrower dies his property will be sold and the credit will be refunded from the proceeds.