A mortgage is an agreement to give up an interest in something if you fail to perform some duty. In
many cases, it means that you'll give up your home if you fail to repay your home loan as agreed.
Mortgage lender
Mortgagee is a party to whom property is mortgaged, usually a lender. Mortgage provides security to
the lender. Given the large sum of money involved in financing a property, a mortgage lender will
usually want security for the loan that will provide a claim upon that security and will take
precedence over other creditors.
Borrower
Borrower is an individual home-owners, landlords or businesses who are purchasing their property by
way of a loan. A borrower is called a mortgagor when the loan is secured by real estate.
Types of Mortgage Loans
There are five basic types of mortgage loans:
1] Fixed-Rate Mortgage - It is a mortgage in which the interest rate does not change during the
entire term of the loan. However interest is generally a little higher than an adjustable rate or
interest only loan.
2] Adjustable-Rate Mortgage - It is a mortgage in which interest rate can vary. The lender can let
the rate adjust monthly, quarterly, annually, every 3 years or every 5 years, depending on the type
of loan you get.
3] Convertible Mortgage - It is a mortgage in which interest rate can be converted into a fixed-rate
mortgage. Typically, a bank or other financial institution charge a service fee to transfer an ARM
into a fixed-rate mortgage.
4] Balloon mortgage - It is a short-term mortgage in which small periodic payments are made until
the completion of the term, at which time the balance is due as a single lump-sum payment
5] Reverse Mortgage - It is a mortgage in which a homeowner, usually an elderly or retired person,
borrows money in the form of annual payments which are charged against the equity of the home.
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