What is a mortgage?
A mortgage is a loan you acquire in order to purchase property, but you can also get cash for other purposes using the property as equity. In return for the loan, you pledge real property (land and/or a building) as security in case you fail to live up to your obligation. When you borrow money against property, you commit to two financial documents: • The NOTE that is a personal obligation to repay the loan on a timely basis • The MORTGAGE DEED OF TRUST that is the pledge of the property as security; the mortgage deed of trust defines your obligations to your lender, as well as your rights and those of the lender. You are pledged to repay the mortgage loan, along with an additional charge for the lender’s service of lending you the money. The cost of borrowing the money is the interest rate specified in your note. The amount of time you have to pay back the loan is the note’s term.