What is a Mortgage?
In real estate, a mortgage is a guarantee that a person who loans money to another person with the objective of purchasing a home is given the guarantee that it will be paid back or the rights to the property bought is transferred to the one who provided the money. A mortgage serves like a legal agreement between the lender and the borrower, and it only terminates when all of the duties have been fulfilled or the borrower has lost his capability to pay back his debt. When the second scenario occurs, the real estate bought by the borrower is given to the lender in exchange of the money loaned by him, regardless if the borrower has already paid some portion of his debt.
Whether the real estate is for residential or commercial purpose, a mortgage can always be applied for it. Since a huge amount of money is involved in this transaction, certain laws are made to govern and legalize the interaction between the two parties. This is to protect both sides from getting taken advantage of one or the other party.
Mortgages play a major role in the real estate industry. Since not every one has the potential to purchase a real estate in full value from his or her personal financial account, use of a mortgage made the purchase possible. And with this, more and more people were given the opportunity to have their own homes or business establishments.