Meaning and Definition of Mortgage

Definition of mortgage

A mortgage is a contract by means of which is taken as a credit guarantee to a good that usually is a property. The well remains in the hands of the owner while this complies with its obligations; otherwise, the creditor can be good selling to collect the money that is lent.
Contract constituting a mortgage must be registered in the land registry to ensure that it has value to third parties. In the case that the accredited breach payments is a claim, to a conviction and the auction of the property. Thus, insofar as contract, a mortgage only imposes an obligation on the debtor and is regulated in accordance with the law.
The three most important aspects of a mortgage are: the capital, which is money loaned by the Bank and which is usually less than the price of the property in order to cover a possible auction; the interest, which indicates the extra percentage that must be paid to the entity that awarded the loan and that it can be fixed or variable; and finally, the term, which is the time that includes the return of principal.
The legal process by which property is lost is called foreclosure. To reach this, the creditors must notify the property owner their intention to auction the property. If you arrive at a complicated situation should negotiate a quick sale of the property with the entity that provided the capital.
In our days is very known the mortgage crisis in the United States that triggered a deep crisis in 2008. Basically what happened was the delivery of mortgage subprime loans ended in late payments and the implementation of many properties. To check that large financial institutions and investment funds had assets involved in this type of mortgage credit shrank suddenly and broke panic and distrust.