MORTGAGE IN REAL ESTATE BUSINESS
A lot of people see mortgage as a tedious or weird way to get a home but surprisingly it is one of the best, easiest and cheapest way to get a house.
Let’s start by defining what a mortgage is.
A mortgage is a kind of loan that the borrower uses to purchase or maintain a home or other form of real estate and agrees to pay back over a period of time, usually the payments come at regular intervals as agreed by both parties.
The property serves as a collateral which is used to secure the loan.
Real Estate Mortgage is a contract whereby the debtor secure to the creditor the fulfilment of a principal obligation, specially subjecting to such security immovable property or real rights over immovable property in case the principal obligation is not complied with at the time stipulated.
Who is a mortgagee and a mortgagor?
Mortgagee in the real estate market
A mortgagee is simply known as a lender.
A mortgagee is an entity that lends money to a borrower for the purpose of purchasing real estate.
Mortgagor in the real estate market
A mortgagor is an individual who mortgages a piece of property. A mortgagor is a person or company who needs a new home or who wants to refinance his existing home and he needs to take out a loan in order to do either of them.
A mortgagor can be seen as a person who gives a mortgage in return for money to be repaid.
A mortgagor is the borrower in a mortgage, typically a homeowner.
In a mortgage transaction, the lender serves as the mortgagee and the borrower is known as the mortgagor.
WHO HAS POSSESSION OF THE MORTGAGED PROPERTY?
- The general rule, the property is retained by the mortgagor.
- The mortgaged property is subjected to a lien by the mortgagee but ownership is retained by the mortgagor.
INTEREST PAYMENT ON MORTGAGE CREDIT
The mortgage credit in form of interest is paid by the mortgagee
REQUISITES OF A MORTGAGE
1. To secure the fulfilment of a principal obligation.
2. The mortgagor should be the absolute owner of mortgaged item.
3. The mortgagor should have free disposal of the mortgage property.
4. The mortgaged asset may be alienated to secure payment when the principal obligation becomes due or unpaid.
5. For a mortgage to be validly constituted and to prejudice third persons, the mortgage should be recorded with the Registry of Property.
Important note – There is no valid constituted mortgage if the deed of mortgage is nothing but a mere private document.
STEPS IN ENTERING A MORTGAGE AGREEMENT
1. Execute the document of mortgage.
2. Go to a public notary, where your documents will be notarize.
3. Pay the documentary stamp tax within the first five days of the succeeding month.
The doc stamp tax is a percentage of the value of the property mortgaged.
4. Go to the Office of the Register of Deeds and pay the registration fees. Before you pay the registration fees, the government will require you to update payment of realty taxes on the property.
After payment of the registration fees, the mortgage will be annotated on the title.
RIGHTS OF A MORTGAGOR
As a mortgagor, you need to know that you have some rights that must be exercised.
1. Right of redemption
2. Transfer of the third party
3. Inspection and production of documents
4. Additions to property
RIGHTS OF A MORTGAGEE
Mortgagee also have some essential rights as listed below
1. Right to foreclosure
2. Right of suit for sale
3. Right to sue for mortgage money
4. Right of sale without the intervention of the court
5. Right to spend money
6. Right to accession to mortgaged property
7. Right of possession
ADVANTAGES AND DISADVANTAGES OF A MORTGAGE PLAN
Outlined below is a few advantage of a mortgage plan
1. It makes is easy for one to be a home owner
2. It is flexible and affordable to obtain since you can spread the debt among months.
3. You can tailor your payment plans to suit your capability
4. It creates a cost effective way of borrowing
Outlined below is a few disadvantage of a mortgage plan
1. You will bear the debt for a long period of time
2. You may lose your home if you default in the repayments of your debts
3. Due to the interest rate, you tend to pay more than the original price on the long run.
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