Mortgage deed



A mortgage deed is the document retained by the holder of a mortgage that proves their ownership of a mortgaged property.

Uses

  • Borrowing money for any purpose using real estate you own as security
  • Purchasing real estate and paying it off slowly over time.

Overview

Mortgages are the way that the vast majority of people in the United States purchase their homes. Under a mortgage arrangement, a buyer borrows money from a bank that holds title to the property until the buyer has paid back the loan. The instrument proving the bank’s legal ownership over the property is a mortgage deed.

Under a mortgage deed, the buyer is allowed to take possession of the property before paying for it in full. The mortgagor – the person or business issuing the funds for the purchase, most commonly a bank – keeps legal title to the property, but only as security on the loan.

The mortgagor does not have any right to enter or possess the property so long as the buyer is up-to-date on payments and in compliance with any other terms and conditions. However, mortgagors do typically retain the right to foreclose on the property and remove the buyer from possession if they fail to live up to the agreement.

Mortgage deeds involve risk on all sides. Buyers are at risk of being removed from their property and losing the equity they had thus far built in their home if they default on the bargain. Similarly, mortgagors are at risk of economic loss if they foreclose on a property that has little or no value. As a result, the form and content of the mortgage deed are very important in making sure that mortgage transactions are carried out in a manner that benefits everyone involved.