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What is a mortgage?
A mortgage is a loan that is secured by real property. A borrower acquires a loan and provides a security interest in the real property owned by the borrower to be purchased with the borrowed funds. This is a common method of using equity or ones ownership interest in real property to obtain funds for other purposes.
Note: The real property may serve as a security interest for more than one loan. If so, this brings up the issue of priority of the security interest, which is discussed further below.
Related Topics
Next Article: How does a Security Interest protect the Mortgage Holder? Back to: SECURED TRANSACTIONS
Related Topics
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Judicial Foreclosure
- Short Sale
- Homeowners Protection Act
- Deed in Lieu of Foreclosure
- Tax Deed
- What are the common types of security interest in real property (land)?
- What is a mortgage?
- How does a security interest protect the mortgage holder?
- Lis Pendens
- Deficiency Judgment
- What is a Deed of Trust or Security Deed?
- What is a Land Sale Contract?
Discussion Question
Can you find out how many homeowners in the United States own homes that are subject to a mortgage? Does this number help you to under the role mortgages played in the economic slowdown in 2008? How do you feel about the ability to use real property to secure a loan that is unrelated to the purchase of property? What do you think about the ability of an owner of real property to have multiple loans secured by the same property?
Practice Question
Veronica is considering opening a small business. She knows that she will need capital to undertake the venture, but she does not have the funds. She is considering her options. She owns a home and has a part-time job as a source of revenue. Can you identify a valid financial option for her?
