House liens {mortgage} can be security for loans to buy houses. House buyers {mortgagor} pay moneylenders {mortgagee}. Mortgages have an indebtedness note and a property lien for debt security. Not making payments {default} cancels mortgage. Lenders have right to dispose of property by foreclosure, under court supervision, to recover lent money. Foreclosure proceedings have statutes.
types
Liens can have primacy {first mortgage}. Mortgages {open-end mortgage} can allow borrowing money in future without rewriting mortgage. Mortgages {packaged mortgage} can include household appliances, furniture, carpeting, and finance charges. Mortgages {construction mortgage} {home improvement mortgage} can require lender to pay costs to builder as construction stages complete. Mortgages {purchase money mortgage} {vendor's lien} can require purchaser to pay seller directly over a number of years.
title
States can give mortgagee title to property, but title cannot transfer until mortgagor completes payments and gains title {common law title theory of mortgage}. Most states give mortgagor title. For defaults, mortgagee has a property lien and right of foreclosure {lien theory}.
time
Loan length is typically 15 or 30 years.
insurance
Lender can require private mortgage insurance (PMI), to repay loan in case of job loss or other problem. Federal Housing Authority (FHA) and Veterans Administration (VA) can guarantee mortgages.
taxes
Mortgage interest payments are deductible from federal and state income tax.
Fixed or increasing monthly or semi-monthly payments reduce principal owed {amortization}|. If payments are constant, people pay off principal slowly at first, because payment is mostly interest.
Houses have value {equity, house}| above remaining principal owed on loan.
Lenders can pay real-estate taxes from accounts {escrow account}|. Lenders can pay monthly insurance fees {private mortgage insurance} (PMI), to insure loan payments, from escrow accounts. Monthly payments to lenders include these extra fees.
Lenders have right to dispose of property {foreclosure, house}|, under court supervision, to get back lent money. Foreclosure proceedings have statute laws.
Mortgages typically have a fee {point, mortgage}| to lender, which can be 1% or more, for originating mortgage and paper work, charged at closing.
Mortgages can allow paying off mortgage early {prepayment clause}.
Buyers can obtain second loans {second mortgage} on real property. Second mortgages are risky to lender, because first-mortgage mortgagee has first right to money. People can obtain second mortgages if borrower's credit is excellent or real-property value is more than both mortgages together. Second mortgages have higher interest rates.
7-Legal Affairs-Property-Housing-Buying
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Date Modified: 2022.0225