Mortgage Loans: Putting Your Property on the Line

2007-03-08 10:33:40

( Financial )



When for some reason you need to borrow money from a lending entity, they will either lend it to you upfront by virtue of your reputation and good credit standing, or the lender will require your property to be used as pawn or collateral in exchange for the money you need. The property serves as guarantee that you will not default on your payments.

SURRENDERING YOUR RIGHTS

You will have to surrender to these lending companies the title or rights to the property you own until such time that you are able to pay back the debt, and then the lender returns the title to you. These are what we call mortgage loans. Because mortgage loans are considered low-risk on the part of the lender, they can also be considered secured loans. These types of loans usually involve bigger sums of money than the ordinary types of loans. Also, mortgage loans generally have longer terms and lower interests.

Often, mortgage loans involve land or real estate property as collateral; and are mostly used for the purchase of real estate as well.

PROTECTING YOUR RIGHTS

Be wary of taking mortgage loans though, because when you surrender a title or rights to a property, you surrender ownership and control of it as well. Since in mortgage loans, the lending company becomes essentially the owner of the said land, they can make use of it however they want within the limits of the law. And this sometimes can present some complications.

Of course, the law protects you as the borrower as well. But you have to make sure that your rights as the borrower are indeed safeguarded – always read the fine print in mortgage loans and make sure you understand the conditions and terms set forth in the contract. Of course, you should never put your property on the line unless you are sure that you will be able to pay back the loan and regain ownership of your precious, hard-earned property.


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