Synchronize your brain with mortgage dictionary to understand the basic concepts of mortgage. Everybody will finance a mortgage loan in some point of life. In fact, a large percentage of the total household credit in North America constitutes residential mortgage. Since purchasing a home is substantial amount of money, Residential Mortgage is the most common way to acquire a home.
Mortgage Loan
The physical property holds and secures the loan. It is a loan to finance the purchase of property, or real estate in a specified period payment and interest rates. The lenders serve the right to repossess the property or real estate in case of default.
Face Value
The borrower promises to the pay the original principal amount which is the face value of the mortgage.
Mortgagor and Mortgagee
Mortgagor is also called the borrower or owner, while Mortgagee is also called the lender. In the mortgage contract, it states the lender who serves the right to repossess the real estate in the event of default. You can also see the same information on the title of the property which is registered at the provincial government's land title office.
Term
The lender usually sets up a 20 or 25 year amortization period which is how long to repay the whole mortgage. The term of a mortgage divides the amortization period into several length of time. Most Mortgagees commonly offers 6 months to 5 year term in fixed interest rates.
First mortgage and Second mortgage
The first mortgage refers to the current mortgage, while the second mortgage refers to the additional mortgage. Financial institutions offer Home Equity Loans and Home Improvement Loans which are good example of second mortgage.
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