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Mortgage Loans

1

A mortgage loan, also referred to as a mortgage, is used by purchasers of real property to raise funds to buy real estate; by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged.

In English common law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and whose improvements come from human efforts.

A lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation.

In finance, a loan is the lending of money from one individual, organization or entity to another individual, organization or entity.

The Role of a Mortgage Loan Processesor by My New Home from Chase

2

The loan is "secured" on the borrower's property.

Understanding Different Types of Mortgages by My New Home from Chase

3

This means that a legal mechanism is put in place which allows the lender to take possession and sell the secured property to pay off the loan in the event that the borrower defaults on the loan or otherwise fails to abide by its terms.

4

The word mortgage is derived from a "Law French" term used by English lawyers in the Middle Ages meaning "death pledge", and refers to the pledge ending when either the obligation is fulfilled or the property is taken through foreclosure.

Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower, who has stopped making payments to the lender, by forcing the sale of the asset used as the collateral for the loan.

Law French is an archaic language originally based on Old Norman and Anglo-Norman, but increasingly influenced by Parisian French and, later, English.

In the history of Europe, the Middle Ages or medieval period lasted from the 5th to the 15th century.

5

Mortgage can also be described as "a borrower giving consideration in the form of a collateral for a benefit."

6

Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property.

7

The lender will typically be a financial institution, such as a bank, credit union or building society, depending on the country concerned, and the loan arrangements can be made either directly or indirectly through intermediaries.

A credit union is a member-owned financial cooperative, democratically controlled by its members, and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members.

A building society is a financial institution owned by its members as a mutual organization.

A bank is a financial institution that accepts deposits from the public and creates credit.

8

Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably.

Interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum.

An interest rate, or rate of interest, is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed.

9

The lender's rights over the secured property take priority over the borrower's other creditors which means that if the borrower becomes bankrupt or insolvent, the other creditors will only be repaid the debts owed to them from a sale of the secured property if the mortgage lender is repaid in full first.

A creditor is a party that has a claim on the services of a second party.

10

In many jurisdictions, it is normal for home purchases to be funded by a mortgage loan.

11

Few individuals have enough savings or liquid funds to enable them to purchase property outright.

12

In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed.

Owner-occupancy or home-ownership is a form of housing tenure where a person, called the owner-occupier, owner-occupant, or home owner, owns the home in which he/she lives.

13

An alternative to mortgages that meets the requirements of Sharia, is the Islamic mortgage.

Islam is the religion articulated by the Quran, a text considered by its adherents to be the verbatim word of God, and, for the vast majority of adherents, by the teachings and normative example of Muhammad.

Sharia, Islamic sharia, Islamic law is the religious law governing the members of the Islamic faith.

14

Sharia prohibits interest, so Islamic mortgages are structured to avoid it by using other strategies such as markup of the purchase price.

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