A mortgage is a type of loan where the borrower agrees to pledge real estate as collateral for ensuring repayment to the lender. In a typical home mortgage, the homebuyer agrees to transfer ownership of the home to the bank if the bank does not receive payment in full and according to the terms of the mortgage agreement. The loan is said to be "secured" by the property collateral.

Who are the mortgagee and mortgagor?

In a mortgage agreement, the mortgagee is the party lending money (usually a bank) and the mortgagor is the party borrowing the money.

What is the loan principal?

The loan principal is the amount of money borrowed, not including interest. Interest is calculated based on the principal amount that remains due and outstanding.

Who is the guarantor?

A guarantor, as the name implies, guarantees repayment on a loan if a borrower defaults. Lenders may require a guarantor, especially if the borrower has poor credit.

What is a security interest?

A security interest is an interest in property—real estate or otherwise—that ensures that a debt is repaid or a promise is fulfilled. If the party that grants the security interest fails to fulfill its obligation, then the holder of the security interest can normally take possession of the asset in question and sell it in order to recoup any losses. Security interest dramatically reduces the level of risk a lender takes on, thereby allowing for lower interest rates and other incentives to borrow. If a security interest is granted, the exchange is known as a 'secured transaction.' A common example of a security interest is a real estate mortgage or deed of trust. Under these agreements, a borrower pledges the home real estate as collateral for repayment of the home loan to the lender. In a security agreement, the debtor secures the transaction using their own property as collateral. Common examples of collateral include bank accounts, stocks, bonds, inventory, equipment, accounts receivable, cars, art, and jewelry. If the debtor fails to repay according to the agreement, then the creditor (also known as the secured party) may keep or sell the collateral.

Mortgage Agreement

A mortgage agreement, like a deed of trust, creates a lien on real estate as collateral for a loan.

Mortgage agreements are always accompanied by a promissory note, which identifies the terms of repayment in detail. In most states, the borrower holds the title to the property as long as the loan is paid off on time. If the borrower defaults, the lender can foreclose on the property, which will be dealt with through the court system.

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Mortgage Agreement

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When to use a mortgage agreement

You are lending money to someone to pay for real estate
You are a borrower taking out a loan to pay for a property
You are helping a borrower or lender make a loan secured by real estate

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Gather Information

As you complete your mortgage agreement, you will need to be able to provide some basic information about the parties involved and the property for transfer.

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Use the information you collected to complete the mortgage agreement. We make this easy by guiding you each step of the way and helping you to customize your document to match your specific needs.

Review and Sign

In most states, your mortgage agreement will be considered effective and executed once it has been signed by both parties.

File Your Mortgage Agreement

It is highly recommended to file your mortgage agreement with the County Recorder’s Office or County Clerk’s Office. By recording your completed mortgage agreement as soon as possible, you gain legal protection from potential adverse claims by other parties.

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