It seems like the housing market is in a bit of an up roar. But if you have been in the mortgage or home business you have seen this before. It is always either a buyers market or a down market, or an up one. The story never changes much. It is the first time home buyers who need to get educated about homes and mortgages and loans.

However, since there are small changes that happen in the market even third time home buyers should educate them selfs when it comes time to get a mortgage. So lets start here.

While mortgages are the most common way of buying a home, it is remarkable how few people actually understand what a mortgage is. For one thing, although we commonly call them Mortgage home loans, this is not at all what they actually are; in fact, they aren’t loans at all, nor are they something that has been given to you by lenders. In fact a mortgage is like a contract whereby the person buying the property (mortgagor) arranges finance to cover the cost from a lender (mortgagee) and the property is used as security against the debt until it is fully repaid. The document is just a simple way to safeguard the lenders interests.
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Without mortgages being available, people and many businesses would not be able to afford the full asking price of a property if it was required they pay this amount upfront. Misunderstandings on how the system works also create problems but the main points are dealt with during the rest of this article. Being the financier, the mortgagee is the person who lends funds to the mortgagor or borrower. A security measure designed for purchasing properties, called a lien, is enforced until the mortgage is cleared at the end of the term.

This is the collateral or the security for the mortgagee who has provided the security instrument. Records of this are normally kept in the public records section of the county courthouse or a similar establishment. This act makes the purchase and the ownership of the house official and no-one can transfer this ownership until the debt is fully paid off. This situation may seem strange but in essence what it means is that the property is owned completely by the mortgagor and not the mortgagee who also does not have the title.
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The only right the mortgagee has over the property now is if payments are missed and the property needs to be sold so the mortgagee can recoup his funds. This process has many names and in the United States it is referred to as foreclosure but this does need to go through the courts. To ensure that everything is legal and above board, the court will place a ruling on the disposal in a process called judicial foreclosure. For the sake of clarity this is only a brief description of a much more complex subject but it should have helped explain the basic subject.

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