Real Estate Law, Spring 2016
Financing is a key to most real estate transactions. Although many changes keep occurring in real estate financing, the mortgage remains the primary method of financing a real estate purchase. This chapter introduces you to the nature and purpose of the mortgage.
One purpose of this chapter is to acquaint you with the basic vocabulary of mortgage financing. It also discusses: 1. The legal repercussions of a mortgagor's default and the many different types of mortgage loans. 2. The application of the mortgage in financing the purchase of real estate. 3. The rights and duties of the parties 4. The relationship between mortgages and other liens. …show more content…
Alternatives to Foreclosure 1. Deed in Lieu of Foreclosure--a procedure in which the mortgagor conveys the mortgaged real estate to the mortgagee, who promises in return not to foreclose or sue on the underlying debt. 2. Short sale – a term used to describe the event where a lender and borrower agree in a contract to sell a property at a price less than the outstanding principal owed on the mortgage.
Types of Mortgages 1. Fixed-Rate Mortgage—a traditional fixed-term mortgage that has a fixed-rate level payment plan and is fully amortized. 2. Adjustable Rate Mortgage (ARM)--a mortgage that contains a provision permitting the mortgagee to adjust the interest rate based on an index contained in the mortgage. 3. Federal Housing Administration Mortgage (FHA Government-Insured Loan)—a loan program that insures mortgage loans made by approved lenders. 4. Veterans Affairs Guarantee on Loans (VA)—a loan program with a partial guarantee by the Department of Veterans Affairs available to lenders that finance home purchases by eligible veterans. 5. Purchase Money Mortgage-- a written instrument