Legal Introduction to Mortgages

A mortgage is a contract, and a security agreement, designed to assure a lender that the borrower will repay the debt--on penalty of losing the property pledged. In short, you put up the property, the lender puts up the money. Technically, it's called a pledge. You give up the property, yet you don't give up the right to use it...unless you fail to make the payments. Then the lender can take the property from you. A good way to start is with the premise that a mortgage is a one-sided legal document, primarily intended to benefit the lender.

In a different sense, you and the bank are partners in a real estate venture, only it is a very senior-junior partnership. The bank has the rights, and you have the liability (namely, the debts and a series of conditions with which you must comply).

Nearly all mortgages have a "grace period" that calls for payments to be made by a certain date each month, but allow you some short period of time thereafter to make payments. Sometimes the period is as short as five days, sometimes as long as 15 days, but a failure to make payment by the end of the grace period is an "act of default."

Here is what you will find in this section:

What You Need To Know About Mortgages
There is nothing magical about a mortgage, it's just money. Money is just another product, and you are the customer. All you need to be a confident customer is an understanding of how the mortgage industry works.

Finding The Right Mortgage
If you are qualified to "buy" a mortgage, there are many people who should love to "sell" you one--and that is exactly how you should approach the mortgage-shopping process.

Second Mortgages
If you've owned your house for a while, you've probably built up some equity that you can tap for a variety of purposes. Maybe it's for your child's tuition, or for a wedding or even for an addition to the premises. One way to access this equity without selling is to give someone a second mortgage.

Renegotiating A Mortgage
Like all legal promises, a mortgage can be renegotiated. Nearly every lender knows the horror of having spend a fortune on legal fees to foreclose on property, and so lenders are often willing to negotiate with you if you are having troubles meeting your monthly payments.

Curing A Default On Your Mortgage
A default occurs when a borrower fails to comply with any of the conditions in a mortgage. Sometimes it's caused by nonpayment--but sometimes it can be something as innocent as failing to keep the property in good repair.