A mortgage deed, also known as a mortgage agreement, is a written document that officially recognizes a legally binding relationship between two parties, the borrower and the lender. The borrower grants the lender conditional ownership of certain real estate or assets in the form of security interest on a loan until the loan is fully repaid. It is separate from the loan agreement or the debt note that establishes the loan itself and defines the terms of the loan. A written credit agreement between you and your father can avoid any misunderstanding between the two of you and can prevent a family fight if there is a problem. It can also avoid any misunderstanding with the IRS. As you can imagine, the IRS is trying to fight gifts between family members disguised as loans. To prevent an intra-family loan from being considered a gift (and subject to gift tax), it is important to have a valid and enforceable loan document. You can develop creative solutions for the borrower, including lower interest rates and one-time payment options. The lender may also be a private investor or a credit company specializing in lending to non-traditional borrowers. These lenders often charge more interest and have shorter amortization periods than a conventional one, but can be a good option for «pinball» or borrowers who renovate a property and then resell quickly. The mortgage agreement does not create real credit if simply grants a right of bet on the property. You need a separate agreement describing the loan in detail. A mortgage contract is a contract between a borrower (called mortgagor) and the lender (which is called the mortgage lender) that creates a right of bet on the ground to ensure repayment of the loan.
In today`s economy, with the strict credit conditions imposed by most traditional banks and lenders, many borrowers are having difficulty obtaining financing for the purchase of a home. A private or alternative mortgage is another option for these borrowers. Buying a property or a house is often a significant investment that requires a considerable amount of money. Lenders will want to end additional security before borrowing large amounts of money to ensure they get their investments back. A mortgage allows them to take possession and sell the property if the borrower stops paying loans. It also gives buyers the opportunity to borrow large sums of money and provides an incentive to make payments for credit or risk losing their property. However, private mortgages are risky. Family members might think that they will be easily forgiven if they miss one or two payments. And higher interest rates and faster amortization conditions, combined with borrowers who do not have proven results, can lead to many defaults.
The 2015 film The Big Short describes the 2008 financial crisis and the collapse of the real estate market, largely due to the glut of these «subprime» loans. The agreement should stipulate that the contract will be terminated if the loan has been fully repaid. The mortgage agreement may also have a co-signer (the so-called guarantor) who is a person who is jointly responsible for the repayment of the loan if the Mortgagor were to insolvaate the credit payments. A deposit is necessary if mortgagor`s income situation means that he cannot obtain credit on his own.