About Mortgage Loan - The Basics


Term mortgage is general term used in our daily life every now and then. People usually associate it with loan amount. However it has a definite meaning. A home loan is always offered on mortgage, it perfectly resembles to any other loan which is offered to the borrower against some security or pledge. However in case of Home loans the security is home itself and the hefty amount is offered to the borrower to buy or build the property/house. The credentials of borrower is utmost important in securing a loan, the eligibility criterion differs from bank to bank.

In layman's term, Mortgage loan is the amount borrowed from the lender by the borrower for buying a property by mortgaging the property itself. To unfold it, in case the borrower defaults the payment, lender would have full right to take the charge of the property. Most generic term for a mortgage is loan against property. More technically it can be said that the property in question is pledged by the borrower in lieu of the borrowed amount (loan). This is also known as security, as the lender's amount is secured against the property. The terms and conditions however, primarily remains the same with all financing institutions, apart from tiny details.

Types of Mortgage

Equitable Mortgage: In this case the financing institutions make a thorough check of the property documents and borrower credentials. The documents should be as per their norms and rules, similarly all companies have presets of regulations for judging customer/borrower credentials as well. Once satisfied, the Housing financing companies approve the loan amount by signing the loan agreement. This is most common and vastly opted method in India by borrowers. This ensures quick approval and smooth granting of loan amount. In this methodology the Mortgage does not requires to be registered under government regulations. However, most financing companies ask the customers to pledge the property documents with them for the stipulated time period.

Registered Mortgage: All other terms and condition remains the same in this type of mortgage, except that, in this case the property needs to be registered in government records. It is mostly borrower's liability to pay the registration charges. However, transferring a registered property is easier, even during the repayment period. A borrower can not sell the unregistered property till the time the loan is paid fully.

Predatory Mortgage Lending

The above intention of mortgage lending is a prime issue of concern in United States. Lenders are often guided by the greed of making more profits and evidently allure unaware borrowers into attractive appearing offers. Once signed, customer often fined themselves at tight end of the rope. However this situation can be avoided by shopping around vigorously before deciding on any financing institution. It is not just borrower's credentials which are to be seen, it is equally important for customers to check on the financing institutions credentials as well. However it is the U.S. law which needs to be redesigned probably, as the mortgage brokers and lenders are able to find loop holes in these regulations and take benefit of it.

Mortgage loan is the most commonly granted loan. Ironically though every other Individual is opting for it, very few of them are actually aware of the basic technicalities associated with borrowing the amount. One should take due care in selecting the best deal as the stake us high and time period is very long.