Financial procedures are interplay of scientific terms, just like science, except the fact that many of terms in the latter are put in common use while financial terms hardly find a place in the commoner’s routine. Mortgage loans are among the most preferred forms of debt at all levels of economic strata, which is lending a sum of money by giving the security of a property and is equal to the current worth of the mortgaged property. Here are some of the most frequently occurring scientific terms with respect to mortgage loans.
Lienholder: The party giving the credit on a property is known as lien holder and the interest obtained on the borrowed security is called lien.
Mortgage Origination: The process held in cooperation between a lender and a borrower resulting in the completion of all formalities and creation of mortgage loan is called mortgage origination.
Deed of Trust: A legal writing in which the legal rights of certain actions on a property is transferred to the lender by the borrower as a security for the loan, and the latter retains the right to ownership on account of full repayment of the loan.
Collateral: The pledge given by the borrower in the form of a property or any other asset as a security for making a condition of secure loan repayment. The lender takes this as a security to be repossessed in case of repayment default by the borrower and is usually inclusive of the worth of the principal and interest of the loan amount.
Repossession: Recovering the right of ownership by the borrower of the property which had been rented, pledged or leased by paying compensation or without any payment through an out-of-the-court settlement or possession by the lien holder from the owner who used it as a collateral.
Insolvent: The parties in a state of insolvency, where they are unable to repay the borrowed amount are said to be insolvent. Insolvency can happen in any financial transaction and firms give importance to Infinity App and other applications to perform planned activities for preventing insolvency.
Amortize: Pay off a loan in well-scheduled installments with pre-specified increments in the principal and interest over the period of the loan tenure.
Foreclosure: In case of defaulting the repayments by the borrower, after a series of notifications, the lender tries to recover the pending loan amount by selling or auctioning off the property. The right to take this step gets included under the mutual deed of trust signed between the lender and borrower in the initial loan processing step.