Tens of millions of Americans have a mortgage. Many of our readers probably have a mortgage on a piece of property in South Florida. And most people understand the basic premise of what a mortgage is, which is a loan from a bank or other lender that helps a person buy property, resulting in monthly payments made on that loan over the course of about 15, 20 or 30 years.
But what rights does the lender have when that loan is made? This is where some homeowners or potential homeowners in South Florida may begin to understand less about the actual mortgage process. For lenders, it is crucial. Lenders have a security interest in the property, and if the borrow fails to uphold their obligations on the loan; the lender could exercise their rights.
So what is a security interest? Well, in short, the security interest essentially guarantees that the lender will be able to take some form of action in the event that the borrower becomes delinquent or altogether defaults on the loan. If this happens, the security interest is what allows the lender to begin a foreclosure proceeding.
A mortgage is always based on the lender's security interest. The borrower grants this interest in order to secure the loan on the property. Both the lender and the borrower have a vested interest in the property in question. As long as the borrower makes the scheduled payments as promised, there won't be a problem between the lender and the borrower. However, if financial difficulties leave the borrower unable to maintain their end of the bargain, the security interest will come into play.
Borrowers need to understand their rights and obligations when it comes to taking out a mortgage on their home. If financial problems arise, it is essential that the lender understands how to navigate the situation in order to avoid adverse reactions. This could help them prevent or stop the foreclosure process or other penalties against them.
Source: www.law.cornell.edu, "Mortgage Law: An Overview," Accessed Feb. 22, 2015