This article is about Some Categories Of Mortgage. Mortgage is a contract where the party who has a debt or loaned a certain amount used a property as the security to the loan. It is an ancillary contract to the principal contract of loan.
Mortgage used as a collateral or security contract has a various types that are recognized and given legal effect. Some of these types include the following:
1. Real Property Mortgage. This is a type of mortgage where real property is used as security for the loan. The mortgage is usually annotated at the back of the title of the property.
2. Chattel Mortgage. This is a contract of mortgage where personal properties are used as collateral. This includes personal properties such as home appliances, cars and other transportation vehicles.
3. Assumed Mortgage. It is a type of mortgage where the buyer of a real property will assume all the obligations of the seller. The debt and mortgages are therefore transferred to the buyer as the new mortgagor. The buyer’s consent on the assumption must be put into writing for this contract to have a binding effect.
4. Endowment Mortgage. This is a type of mortgage loan where the principal loan or capital is paid by endowment policies and the mortgage processing is done. This is usually based on interest. In this type, there are two separate and distinct contracts. One is the contract of loan, and the other is the endowment insurance to pay the capital.
5. Participation Mortgage. This is a type of mortgage where the lender will participate to the income generating activities of the debtor. It is an arrangement where aside from the principal debt being paid by the debtor the interest is paid according to the lender’s share in the debtor’s business or undertaking.
6. Balloon Mortgage. This is a type of payment where one do not fully amortize the term of the obligation contract and when it becomes mature, the payment is usually in big amount, thus the term balloon mortgage.
7. Foreign National Mortgage. This type of mortgage is one where the mortgage is executed to a non-resident foreign individual. This is the usual method of non-US residents to own a property here in United States.
8. Flexible Mortgage. This is a type of mortgage where mortgagee companies offer flexible requirements so that the real estate mortgagor will be able to pay according to their capacity. This type of mortgage is commonly used in the United Kingdom.
9. Reverse Mortgage. Also known as lifetime mortgage, the payment for this type of mortgage is made upon death of a person, sale of the property or the owner leaves the property. Therefore, giving it the term “reverse”. It is usually accepted for seniors.
Knowing these several types of mortgages will help you to identify what type of security you will execute in favor of your loan. These types of mortgages offer different legal implication and remedies and therefore shall be properly applied. To know and understand them is to have weapon against abusive creditors, lending companies and loan sharks.