Friday, July 16, 2010
MORTGAGE : THE SECURITY INTEREST ON PROPERTY GRANTED TO THE LENDER
Mortgage may be defined as a security interest on real property granted to the lender.There are many factors which defines the characteristics of mortgage. These factors are Interest, Term, Payment amount and its frequency and Prepayment factors. The interest applicable here may be either fixed or variable. Interest may change at certain periods. Generally there will be a certain period of time when loan can be paid which is known as the term of mortgage. In some cases the amount paid per period may change as per the frequency of the payment. In American property law a mortgage occurs when the owner pledges his or her interest as security for the loan. As Mortgage have the rate of interest this is supposed to be amortize over a particular scheduled period of time. Here the properties are secured along a mortgage bearing an interest rate which is supposed to be reflecting the risk of the lender. While purchasing a property by taking mortgage loan lenders makes it sure that the borrower makes a downpayment. Downpayment is the contribution of a portion of the cost of the property. Downpayment may be defined as the portion of the value of the property. In U.S.A. when a mortgage is secured by a borrower the process is known to be origination. The borrower has to submit a loan application and the documents relating to the financial history of the client to the underwritter. In many cases the banks offer "no-doc" or few -doc offer. In this case the borrower is required to submit only minimal financial documentation and information.