Mortgage Definition


Mortgage A mortgage is a legal agreement that transfers ownership of one of the assets or real estate from its owner to the borrower as collateral for the loan. The interest of the original owner is reflected in the record of documents of ownership and is canceled when the loan is paid in full.

A mortgage can be mortgaged, and an order for reservations for sale can be obtained in court if the borrower cannot pay. The mortgage must have a fixed period of time, and the mortgage has the right to repay the loan after paying off the debt.

Mortgages are the most common type of debt for several reasons, including a low interest rate, to provide the lender and procedures. Direct, standard and repayment periods are long enough. The difference between a collateral and a mortgage When buying any property, you must have cash and not have cash, which leads to applying for a loan and require housing to guarantee the lender, and one of the common methods of guarantee is a collateral or mortgage, and both lead to the same result, namely, a loan with a house as collateral, but there are differences. And the differences between them are as follows:

[1] There are parties in the mortgage in the mortgage, namely the owner, the borrower and the bank , in which a loan is provided with a guarantee of housing for payment, and if payments are not made, the bank can reserve a mortgage using the legal system to obtain ownership of the house and the bank Reselling the house to restore the cost of the loan that it originally issued and which is often sold through an auction, and this leads to the sale of a house at a big discount, the problem in buying out real estate is that it is busy it takes a lot of time, and there is also what is called a decision, when the owner of the house can return the property during the mortgage process at the time of payment.

A trust bond, which is an instrument of a loan agreement, according to which the homeowner remains responsible for making payments to the bank, and he is a trustee who actually owns the property of the house until the loan is fully paid, that is, there is a third party , and as soon as the loan has been paid, the guardian of the house gives up his property to the borrower, and if payments are not made, the bank can take the house from an agent and avoid foreclosure, and the borrower does not actually retain the right to own real estate. Banks prefer a trust instrument because they can obtain ownership of the property and resell it faster, which reduces the administrative burden and time.

Alternative mortgage instrument AMI In an alternative mortgage instrument, the interest rate is not fixed in any housing mortgage loan or a fully consumed loan at an interest rate, it is a real estate loan as collateral and includes loans with variable interest rates and interest loans, most of which are mortgage loans Residential real estate, since these unconventional mortgages facilitate the purchase of real estate by reducing the amount of monthly payments and increasing the price that can be financed, and the percentage is balanced by the high cost of the mortgage, if the borrower’s income does not grow at the same rate as mortgage payments, and loans with a fixed interest rate have an interest rate Variable, where it changes over time.

The price also contains a base indicator that changes periodically. When the index moves up or down, the planned loan payments also move. Total capital and interest rate are calculated in equal installments relative to the term of the loan. There are other types of alternative real estate loans, such as variable interest mortgages, adjustable interest rates, etc.

[2] A variable interest rate mortgage, ARM, which is an index based interest rate loan known as A PM or adjustable rate loan, where each lender decides how many points he will add to the index rate, which is a few percentage points and depends on the conditions of the loan, can occur every month or year or every three years, which means that payment may suddenly increase after a five year period. Initially, if the LIBOR rate rises to 2.5%, the new interest rate will rise to 4.5% or 5.0%. The historical price of LIBOR shows.