200012 Lecture Notes - Lecture 9: Property Law, The Monthly
3 May 2019
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Document Summary
Over many years, the borrower repays the loan, plus interest, until he or she owns the property free and clear. Mortgages are also known as "liens against property" or "claims on property. " If the borrower stops paying the mortgage, the lender can foreclose. In a residential mortgage, a homebuyer pledges his or her house to the bank. The bank has a claim on the house should the homebuyer default on paying the mortgage. In the case of a foreclosure, the bank may evict the home"s tenants and sell the house, using the income from the sale to clear the mortgage debt. With a fixed-rate mortgage, the borrower pays the same interest rate for the life of the loan. The monthly principal and interest payment never changes from the first mortgage payment to the last. Most fixed-rate mortgages have a 15- or 30-year term. If market interest rates rise, the borrower"s payment does not change.
