Page 13 - Book6E

CHAPTER 2
Mortgage Loans
A mortgage loan is secured by real property, usually residential prop- erty like a house, condominium, or time-share property. The interest is generally lower on a mortgage loan than on non-secured loans because the property is considered collateral and reduces the risk for the lender.
A mortgage loan is the most popular way for individuals or groups to finance ownership of a home or residence. The main components of a mortgage loan are:
• Property: the physical property being financed
• Mortgage: the loan
• Borrower or borrowers: the person or persons desiring ownership of the property
• Lender: any lender, but usually a bank or similar financial insti- tution
• Principal: the original size of the loan, which may or may not include costs in addition to the price of the property such as closing costs
• Interest: the charge for borrowing the lender's money
• Foreclosure or repossession: the right of the lender to foreclose,
repossess, or seize the property if the mortgage contract is broken
A great deal of “creative” financing has been developed to make it possible for people with poor credit to obtain a mortgage loan. It’s
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