You’ll notice that whenever I talk about mortgages, I actually say “mortgage loans”. That’s because, if you buy a home and you borrow the money, you’re not paying your “mortgage”, you’re paying your “mortgage loan”.

Here’s a better explanation:

Most of us are accustomed to calling our home loan a mortgage, but that isn’t an accurate definition of the term. A mortgage is not a loan, and it is not something that the lender gives you. It is a security instrument that you give to the lender, a document that protects the lender’s interests in your property.

How a Mortgage Works

* There are two parties to a mortgage. You are the mortgagor, or borrower, and the lender is the mortgagee.

* A mortgage document creates a lien on the property, which serves as a lender’s security for the debt. The lien is recorded in public records, probably at your county courthouse.

* Ownership cannot be transferred to someone else until you pay the debt to release the lien.

* Even if your loan is secured by a mortgage, you still have full title to the property. No one else has rights of ownership.

* A mortgage gives the lender the right to sell the secured property to recover funds if you do not pay the debt. The sales process is called foreclosure.

* When a mortgage is used for security, foreclosure must usually progress through the court system. That type of foreclosure is called a judicial foreclosure.

Home Buying – A Mortgage is Not a Home Loan – About.com

Of course, in the real world, just about everyone uses the term “mortgage” to mean “mortgage loan”.

Doesn’t mean it’s right!

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Updated:  1st Q 2018

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