When to use Mortgage Agreement
When an aspiring homeowner, landowner or real property owner of any type seeks financing to buy that property, a mortgage agreement is almost always at the heart of the paperwork tied to the purchase transaction. In a nutshell, a mortgage agreement functions as a lien on the property. Practically speaking, this means that the borrower understands that if the terms of the corresponding loan paperwork are not honored, that borrower will be compelled to relinquish their claim to the property being purchased. If the terms of the property financing contract (such as a homeownership loan) are not paid as promised, the lender turns to the mortgage agreement in order to seek a remedy.
If you are lending someone money to purchase real property or you are borrowing money from someone in order to purchase real property, you may use this mortgage agreement to outline the details of the lien arrangement. It is important to note that mortgage agreements are legally-binding contracts. It is therefore critically important to think carefully before you enter into a mortgage agreement, either as a lender or a borrower. If the terms articulated are not reasonable, there could be life-changing consequences down the road for the borrower and his or her loved ones. Although the risk is somewhat lower for the lender, signing an ill-advised agreement could lead to a sincerely stressful situation for all involved. So, should you have any questions or concerns whatsoever about drafting a mortgage agreement, please do not hesitate to consult an experienced attorney before you sign on the dotted lines.
It is important to note that in certain jurisdictions, trust deeds are used in place of mortgage agreements. If you have any doubt as to which legal tool you need to work through, please consult an attorney.