It's not your mortgage
Let’s first eliminate a common misunderstanding. Banks do not GIVE mortgages.
If you have a home with a mortgage, the bank owns the mortgage. How did they get it? You GAVE it to them. Most people say that they are going to get a mortgage when in fact they are really giving a mortgage.
A mortgage is the legal documentation that gives the lender the right to foreclose. If you choose not to pay, the mortgage provides the steps the bank will follow in order to regain their investment by selling your house. It also give the legal power to make that sale happen. When you give a mortgage, you are giving to the lender the right to take away your property if you default.
When you purchase a home and you use a lender, the lender will require some sort of promise from you that you will repay a loan. That promise from you is your “note”. Don't confuse this with the term mortgage. The note is your IOU or promise to pay while the mortgage is the lender’s right to compensation. (Note: A Deed of Trust, for practical purposes, is nearly the same as a mortgage).
You might ask, “… if the bank has a mortgage on my home, do I own my home or does the bank own it? “ That depends on where you live (which state). Who ever owns the title to the property is the owner of the property.
In our state, the state of South Carolina, we are a lien theory state. That is, the homebuyer owns the title to the property at closing (close of escrow); but, the bank places a lien on the property (described in the mortgage language).
There are circumstances in other states where the bank retains title to the property until the entire series of mortgage payments are paid -- at which time the title is issued to the buyer. This can be the case with certain types of governmental owned properties such as those foreclosed on by the VA (VA Repo) and placed on the market for resale. It is possible, in a case like this, that the VA will retain the title to the property until the second loan is re-paid. Also, with certain forms of owner financing, the previous owner may retain title to the property until all payments are completed (example: contract for deed or land contract).
Yes, the bank owns the mortgage on your home. But ... YOU get to live in that beautiful home. You might even own it!
Filed under: Real Estate, Buyer Information, HUD 1, bank property, lenders, mortgage brokers, charleston mls, charleston home sales, charleston market, charleston homes for sale, mortgages, loans