Mortgage
Security for a loan, and most frequently the mortgage is placed on the borrower’s property, but may be placed on a third person’s property, to secure the loan of the borrower. When a buyer finances the purchase price, two separate documents are executed by the buyer (i) a note promising repayment of the loan, and (ii) a mortgage to secure the repayment of the loan.
- Example : Joseph is looking to purchase a $400,000 property. Joseph puts $40,000 down when he signs the contract. He plans on bringing an additional $40,000 of his own money to the closing. Joseph takes out a mortgage of $320,000 and signs a note on the mortgage, promising to repay it over the next 30 years at a fixed interest rate.
