Definition of Mortgage Loan:

Orange County Mortgage Loan:

A debt instrument, secured by the collateral of specified Orange County real estate property, that the borrower is obliged to pay back with a prearranged set of monthly payments (Usually 15 or 30 years). Mortgages are used by individuals to make real estate purchases without paying the entire market value of the property to start. Over a period of time, the borrower repays the mortgage (unless they had chosen an interest only option), plus interest, until they eventually (hopefully) own the property free and clear. If the borrower stops paying the mortgage, the bank can elect to foreclose on the property. In a residential mortgage, a home buyer pledges their home to the bank. The bank has a claim on the home should the home buyer default on their mortgage (becoming 60-days delinquent or greater).

Mortgages come in many forms. A fixed-rate mortgage is self-explanatory. With an adjustable-rate mortgage (ARM), the interest rate is fixed for an initial term (usually 5, 7 or 10 years), but then it fluctuates with market interest rates. The initial interest rate is often a below-market rate, which can make a mortgage seem more affordable than it really is. If interest rates increase later, the borrower may not be able to afford the higher monthly payments. Interest rates could also decrease, making an ARM less expensive. In either case, the monthly payments are unpredictable after the initial term.

 

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