Mortgagor vs Mortgagee
Mortgagor vs. mortgagee is a term that anyone planning to buy a house with bank funds needs to learn about. When people obtain home loans they mortgage the property by entering into a legal contract with the bank.
Mortgage notes identify the mortgagor vs. mortgagee, along with details of the loan including interest rates, installment amounts, and payment dates. Mortgages are secured with promissory notes that include mortgagors' signatures to verify they understand the terms of the agreement and will pay back borrowed funds.
Mortgagee refers to the individual or lending institution providing funds needed to buy real estate. The property is used as collateral and the Mortgagee places a lien against it until the note is paid in full.
As long as mortgagors comply with the terms they will be able to own the property outright when the loan obligation is fulfilled. Any time homeowners default on mortgage payments they place their property at risk for foreclosure.
Losing a home to foreclosure results in severe credit damage that prohibits people from buying a house for several years. In many cases, homeowners enter into mortgage bankruptcy to stop foreclosure proceedings while they work out a Chapter 13 payment plan.
If Petitioners fail out of bankruptcy they will likely lose their property. Anyone that is struggling to meet loan payments ought to investigate foreclosure prevention programs such as Making Home Affordable.
Another consideration of taking out a mortgage loan is prepayment penalties. Lenders often include penalties to deter mortgagors from paying off their loan early. Penalties are assessed to offset the loss of interest the bank would earn over the term of the note.
Banks are required by law to disclose if a prepayment penalty clause is in effect. A new law requires lenders to provide the information to loan applicants in the initial Good Faith Estimate, as well as in the Truth in Lending (TIL) statement provided in mortgage documents.
The upside of taking out a home loan that includes prepayment penalties is that interest rates are usually lower. If mortgagors plan to stay in the house for a long time or use it as investment property it might be beneficial. However, if the property is purchased for short term use only it's best to shop around for lenders that do not assess early payoff penalties.
A good source for comparing lenders and mortgage rates is BankRate.com. This bank rate monitoring service provides unbiased reviews on over 300 financial products and 4,800 financial institutions in the U.S. territory.
People often fail to realize how much they can save by shopping for the best interest rate and closing costs. Others are unfamiliar with the various financing options and end up in loans that aren't suited for their needs.
Mortgagors ought to have a good understanding of fixed, adjustable rate, jumbo, FHA, Fannie Mae, and Freddie Mac loans. Each offers advantages and disadvantages that need to be weighed carefully before signing on the dotted line.
Buying a house is a big investment, so take time to study everything and consult with trustworthy experts. Get started by visiting our home buying blog and become familiar with terms like mortgagor vs. mortgagee, loan to value, debt to income ratio, promissory notes, and points.
Published on July 02, 2012 at 04:16 PM