Economics
Mortgages
A mortgage is a loan provided by a bank or financial institution to help individuals or businesses purchase real estate. The property itself serves as collateral for the loan, and the borrower makes regular payments over a set period of time to repay the loan plus interest. Mortgages are a key component of the housing market and play a significant role in the economy.
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9 Key excerpts on "Mortgages"
- Rasim Yilmaz, Günther Löschnigg(Authors)
- 2020(Publication Date)
- Peter Lang Group(Publisher)
Conceptually, the mortgage consists of a combination of the words “gage”, which means a deposit left in return for a promise in German, and “mort’, which means “dead” or “immovable’ in French. A mortgage is defined as a credit in which a real estate is used as a collateral, security and pledge. (Yavaş, 2005: 3). Application of mortgage system in Turkey is somehow different from other countries. In Turkey, the maturity of mortgage loans is longer and different from the interest rates of housing loans (Kaya, 2013: 276). The mortgage system in Turkey can be explained as enabling the transfer of funds between the supplying and demanding parties, making the loan conditions suitable for a wide range of buyers, paving the way for long- term, supporting the development of financial markets and capital markets and increasing the level of housing production through various regulations (Ayrıcay and Yıldırım, 2007: 55). One of the reasons why mortgage plays an important role in the housing finance system is that buyers are able to own a house in favorable terms of repay- ment and long-term. The other reason is the ability to create low-cost funds. Another reason is the application difference from other housing credits as such mortgage enables banks or other institutions that provide the credit to sell loans freely in secondary markets (Baloğlu et al., 2007: 16–17). The mortgage system in housing finance utilizes two sources of finance in general. One of them is to provide housing finance in the long term by means of the institutional method and the other is to bring the real estates which are the idle investments in the bal- ance sheets of the enterprises into the market again (Baloğlu et al., 2007: 18–19). From another point of view, mortgage is the solution of the housing finance problem by using capital market funds within free market rules.
No longer available |Learn more- (Author)
- 2014(Publication Date)
- The English Press(Publisher)
As with other types of loans, Mortgages have an interest rate and are scheduled to amortize over a set period of time, typically 30 years. All types of real property can be, and usually are, secured with a mortgage and bear an interest rate that is supposed to reflect the lender's risk. ________________________ WORLD TECHNOLOGIES ________________________ Mortgage lending is the primary mechanism used in many countries to finance private ownership of residential and commercial property. Although the terminology and precise forms will differ from country to country, the basic components tend to be similar: • Property: the physical residence being financed. The exact form of ownership will vary from country to country, and may restrict the types of lending that are possible. • Mortgage: the security interest of the lender in the property, which may entail restrictions on the use or disposal of the property. Restrictions may include requi-rements to purchase home insurance and mortgage insurance, or pay off outstanding debt before selling the property. • Borrower: the person borrowing who either has or is creating an ownership interest in the property. • Lender: any lender, but usually a bank or other financial institution. Lenders may also be investors who own an interest in the mortgage through a mortgage-backed security. In such a situation, the initial lender is known as the mortgage originator, which then packages and sells the loan to investors. The payments from the borrower are thereafter collected by a loan servicer. • Principal: the original size of the loan, which may or may not include certain other costs; as any principal is repaid, the principal will go down in size. • Interest: a financial charge for use of the lender's money.
eBook - ePubMaking Money in Real Estate
The Canadian Guide to Profitable Investment in Residential Property, Revised Edition
- Douglas Gray(Author)
- 2010(Publication Date)
- Wiley(Publisher)
CHAPTER 5Understanding the Financing AspectsIf you have been considering the purchase of a house, condominium, or real estate investment for some time, you probably have some savings already set aside for a down payment. In order to be realistic in your search, it is important to ascertain the size of a mortgage for which you qualify. You also want to determine your personal financial needs. (See also Chapter 1: Understanding Real Estate Investment.) This information, along with knowing how much money you can raise personally and the demands of your investment strategy, will provide you with an affordable range for your new property.This chapter covers many issues that you need to consider when obtaining property financing. It will help you understand the jargon and concepts to assist your financing selection process.Topics to be discussed include the types and sources of financing, how to calculate the amount of your mortgage eligibility, applying for a mortgage, costs of a mortgage, and what happens if you default on a mortgage. In addition, this chapter explains creative financing and how to deal with negative cash flow, and provides negotiating tips. Web sites of interest are provided for your further research.What Is a Mortgage?
A mortgage is a contract between one party who wants to borrow money and another party who wants to lend money. The borrower is referred to as the mortgagor, and the lender is referred to as the mortgagee. These terms can sometimes be confusing. The terms “borrower” and “lender” are also used. The mortgage agreement states that in exchange for the money that the lender provides, the borrower will provide security to the lender in the form of a mortgage document to be filed against the property. For the purposes of this book, the term “property” will refer to the purchase you are considering, whether it is a condominium, house, multi-unit dwelling (such as duplex, fourplex, apartment), or raw land. The mortgage document specifies the rights that the lender has to the property in the event the borrower defaults on the terms of the mortgage. The types of remedies that the mortgagee has against the mortgagor are covered later in this chapter.
eBook - ePubLand Law
A Problem-Based Approach
- Rebecca Kelly, Emma Hatfield(Authors)
- 2017(Publication Date)
- Routledge(Publisher)
■ The purpose of the mortgage is to secure the loan; you would normally expect to be able to pay it off and the property to then be free of it.■ Could the terms agreed to be viewed as unfair? Does it matter that this was in a commercial context?____________WHY HAVE Mortgages?
The cost of buying property is high – for many people house prices will be between five to ten times greater than their annual salary. With such a high cost few people can afford to buy a house outright. Most people have to seek help by borrowing the money to purchase their home or land and this is commonly done by way of obtaining a mortgage from a bank or building society which is secured against the land in case the borrower becomes unable to repay the mortgage. As we will see in this chapter Mortgages are not just used to purchase a home since sometimes a businessman will obtain a loan on the security of his home in order to acquire or inject capital into his business. It is possible to have more than one mortgage over the land and we will consider the rules for priority of Mortgages i.e. who is entitled to their money first.ESSENTIAL TERMINOLOGYMortgage A disposition of some interest in land or property as a security for the payment of a debt, or the discharge of some other obligation for which it is given. The mortgage is the security and not the loan itself. Mortgagee The person who receives the security, i.e. the lender/creditor. Mortgagor The person who gives the security, i.e. the borrower/debtor. Legal charge Confers rights in the land or property on a chargee (lender) as security (as before). Redemption The right of the mortgagor to repay the loan and claim back the land or property free from incumbrance (also spelled encumbrance), exercisable after the date fixed for repayment has passed. Equity of redemption The totality of the equitable rights of the mortgagor, including the right to redeem. Its value equals the market value of the land less the amount of debt outstanding on the land at any time. 
- Michael Brandl(Author)
- 2016(Publication Date)
- Cengage Learning EMEA(Publisher)
Home Mortgages , once considered a wonderful conduit for “average” Americans to own their own home, have now become a growing source of anxiety and angst for many Americans. These same Mortgages are at the center of the recent financial crisis, the worst since the Great Depression of the 1930s. How can it be that home ownership and Mortgages, once viewed so positively, have come to cause American families and the global economy such misery? That is the question we seek to address in this chapter. Home Mortgages: A loan for which residential real estate is used as collateral. The lender may take possession of the property if the borrower fails to repay the money. To understand how home Mortgages came to play such a pivotal role in the current cri-sis, we need to understand the “language” of the mortgage market. Thus, after examining the impact the mortgage market has on the larger US economy, we delve into the basic concepts of the mortgage market. From there we discuss how mortgage payments work and why many American families get into trouble. Then we consider the new types of Mortgages that have come about within the past few decades and examine the secondary mortgage market. Finally, we explore the role the mortgage market played in the recent crisis. 18-1a The Broad Mortgage Market In the early days of the twentieth century, home ownership rates in the United States were relatively low. As Table 18-1 shows, before the end of World War II the rate of home ownership in the United States remained fairly constant, within the range of about 43% to 48%. During these years, financing a home purchase was very difficult for a typical family. Home Mortgages required the buyer to have at least half of the purchase price in cash, and only if they were a solid credit risk could they then borrow the other half of the purchase price. Saving up half the purchase price of a house could take an average family several decades.
eBook - ePub- Judith Bray(Author)
- 2013(Publication Date)
- Taylor & Francis(Publisher)
12 Mortgages12.1 Definition of Mortgages1 A mortgage of land is the conveyance or transfer of land made to secure the future repayment of a loan or the discharge of some other obligation.2 The land is transferred to the lender but subject to the provision for redemption, which provides that once the loan has been repaid the transfer becomes void or the land is transferred back to the borrower.3 The borrower (mortgagor) grants the mortgage to the lender (mortgagee).4 A mortgage takes effect both in property law and in the law of contract.12.2 The development of Mortgages at common law and in equity12.2.1 The common law1 Before 1926, when the mortgagee took out a mortgage he/she actually conveyed the land to the lender, stipulating that, on a certain date, the mortgagee would reconvey the property back to the mortgagor.2 The repayment had to be on the date agreed and there was no scope for varying the date.3 Failure to repay on the agreed date meant the mortgagor lost the property to the mortgagee even if the value of the property was far more than the outstanding amount on the loan.12.2.2 Equity1 Equity modified the effects of the common law in the seventeenth century and allowed the repayment to be made after the redemption date, called the ‘equitable right to redeem’.2
eBook - PDF- Nicola McDougall, Bruce Brammall(Authors)
- 2023(Publication Date)
- For Dummies(Publisher)
CHAPTER 5 Understanding Mortgages 45 Chapter 5 IN THIS CHAPTER » Understanding lender financing options » Selecting the best mortgage for your situation » Unpacking interest rates Understanding Mortgages M ortgages with a capital M — the word is enough to inspire financial fear in the uneducated. But here’s the thing: Mortgages are nothing to be feared and rather should be seen as a vehicle for you to improve your financial future using other people’s money — that is, the banks! You see, a mortgage on residential real estate is classed as good debt because your repayments are reducing the principal on a capital growth and, potentially, incoming-producing asset. You probably also have questions about how to select the mort- gage that’s most appropriate for the property you’re buying and your overall personal and financial situation. This chapter covers the financing options you should consider (and highlights those you should avoid). Taking a Look at Mortgages Although you can find thousands of different types of Mortgages (thanks to all the various bells and whistles available), you need to understand the four basic mortgage types, covered in two 46 Buying a Property For Dummies groups. The first group focuses on the type of interest rates you can choose — variable interest rates or fixed interest rates. The second group involves a decision on whether your repayments will be interest-only or also repay part of the borrowed capital, called a principal and interest (P&I) loan. All Mortgages combine at least one element from the first group — variable or fixed interest — with one from the second group — interest-only or P&I repayments. But Mortgages can combine both elements of each group — the interest rates can remain fixed for a number of years and then have a variable interest rate after that, and the repayments can start off as interest-only and then later switch to principal and interest.
- Robert Brechner, Geroge Bergeman(Authors)
- 2019(Publication Date)
- Cengage Learning EMEA(Publisher)
Monkey Business Images/Shutterstock.com SECTION I: Mortgages—Fixed-Rate and Adjustable-Rate 14-1: Calculating the monthly payment and total interest paid on a fixed-rate mortgage (p. 469) 14-2: Preparing a partial amortization schedule of a mortgage (p. 471) 14-3: Calculating the monthly PITI of a mortgage loan (p. 473) 14-4: Understanding closing costs and calculating the amount due at closing (p. 474) 14-5: Calculating the interest rate of an adjustable-rate mortgage (ARM) (p. 477) SECTION II: Second Mortgages—Home Equity Loans and Lines of Credit 14-6: Calculating the potential amount of credit available to a borrower (p. 483) 14-7: Calculating the housing expense ratio and the total obligations ratio of a borrower (p. 484) P E R F O R M A N C E O B J E C T I V E S 14 C H A P T E R Mortgages Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 468 Chapter 14 • Mortgages M ORTGAGES —F IXED -R ATE AND A DJUSTABLE -R ATE Real estate is defined as “land, including the air above and the earth below, plus any perma-nent improvements to the land, such as homes, apartment buildings, factories, hotels, shop-ping centers, or any other ‘real’ property.” Whether for commercial or residential property, practically all real estate transactions today involve some type of financing. The mortgage loan is the most popular method of financing real estate purchases. A mortgage is any loan in which real property is used as security for a debt. During the term of the loan, the property becomes security, or collateral, for the lender, sufficient to ensure recovery of the amount loaned.
eBook - PDF- José Luis Suárez(Author)
- 2008(Publication Date)
- Palgrave Macmillan(Publisher)
Another measure of the importance of the mortgage markets is the size of these products relative to the total loans offered by financial institutions. Without doubt, Mortgages play a key role in the activities of financial institutions, as is demonstrated by the level of Mortgages as a proportion of the total loans they offer, as shown in Figure 5.9. The ratio increased in all the countries after 1996, apart from Germany, which remained fairly stable until 2006, reflecting the maturity of its mortgage market (similar to that of the United Kingdom, where the ratio has increased slowly) and the efforts of the banks to increase their activity in other credit-related areas. Note that Figure 5.9 includes only residential mortgage loans, as the ratio of the mortgage market to total loans would be even higher if we included commercial mortgage loans. Another measure of the level of mortgage indebtedness is the out- standing balance per capita. The contribution of this measure can be tested with Luxembourg, which appears to be very small when 164 European Real Estate Markets 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Portugal Netherlands United Kingdom Belgium Germany Europe average Rep. of Ireland Spain France Greece Italy Sweden Austria 1996 2000 2006 Figure 5.9 Residential mortgage loans/total loans: outstanding balances, selected European countries, 1996, 2000 and 2006 (percentages) Note: Austria’s data are for 2001 and 2006. Source: European Mortgage Federation (2007), Thomson DataStream (accessed June 2008). 0 5 10 15 20 25 30 35 40 45 Denmark Netherlands Rep. of Ireland United Kingdom Luxembourg Sweden Germany Finland Spain EU -27 Belgium France Portugal Austria Greece Italy Malta Cyprus Estonia Latvia Hungary Lithuania Slovenia Czech Republic Slovakia Poland Bulgaria Romania Figure 5.10 Mortgage loans outstanding per capita, EU-27 countries and EU-27 total, 2006 (000s euros) Source: European Mortgage Federation (2007).
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