Mortgage
Mortgage: A lien against real estate that secures payment of a debt, commonly used to finance the purchase of residential and commercial properties.
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Definition
A lien against real estate that secures payment of a debt.
Purpose
Mortgages provide a way for individuals and businesses to borrow money to purchase real estate, using the property as collateral. The lender holds a lien on the property until the debt is repaid, ensuring they have a claim to the property if the borrower defaults on the loan.
Examples of Use
- Home purchase: Obtaining a mortgage to finance the purchase of a residential property.
- Commercial real estate: Using a mortgage to acquire or refinance commercial properties such as office buildings, retail spaces, or industrial facilities.
- Property development: Financing the construction of new real estate projects through a mortgage.
Related Terms
- Lien: A legal right or interest that a creditor has in the debtor's property.
- Foreclosure: The process by which a lender takes possession of a property due to the borrower's failure to make mortgage payments.
- Refinancing: The process of replacing an existing mortgage with a new one, typically to obtain better terms or lower interest rates.
Notes
- Mortgages typically involve a down payment, monthly payments of principal and interest, and various fees and closing costs.
- Interest rates on mortgages can be fixed or variable, affecting the overall cost of the loan.
- It is important for borrowers to understand the terms of their mortgage and ensure they can meet their payment obligations to avoid foreclosure.
Related Terms
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