A legal document that pledges a property to the lender as security for payment of a debt.
Simply put, the mortgage is the legal document that gives the lender a legal claim against your house should you default on your loan payments. The mortgage indicates that a specific amount of money will be loaned at a specific interest rate so that you can buy your home. Another way of thinking of the mortgage is that you have possession of the property but the lender has ownership until you have repaid your loan.
The items stated in the mortgage include the homeowner's responsibility to:
-- pay principal
-- pay interest
-- pay taxes,
-- pay insurance on time,
-- pay to maintain hazard insurance on the property, and
-- adequately maintain the property.
The mortgage also includes the basic information found in the note.
Should you consistently fail to meet these requirements, your lender can seek full repayment of the balance of the loan, foreclose on the property, or sell the property and use the proceeds to pay off the loan balance and foreclosure costs.
A deed of trust is used instead of a mortgage in some states.
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