When a person opts to get a loan from a lending institution, a pledge requirement is given to the borrower in the form of property. This is part of the institution’s Contract Negotiation Strategies in case the borrower fails to comply with the payments of the loan. A contract is made in relation to the pledge referred to as a mortgage contract.
Similar to a Property Management Contract, a mortgage contract is one of a few contracts that legally binds the borrower to the lending institution. In this regard, mortgage contracts must be written precisely stating the needed information in relation to the mortgage agreement of the parties.
Mortgage Purchase Agreement
Correspondent Loan Purchase Agreement
What Is a Mortgage Contract?
A mortgage contract is a document showing information of the transfer of interest on a property. Like any other legal document, a mortgage contract binds the parties of the required duties.. There are two parties involved in this contract as follows:
- Mortgagor – This is the debtor who borrows money and renders a property as mortgage. In case of failure of payment, he will have no hold on the asset pledged.
- Mortgagee – This party is the one who lends the money to the mortgagor. He acquires the right to the pledged property if the mortgagor fails to pay for the loaned amount.
Essential Elements in a Mortgage Agreement
Similar to Service Contract Templates and Job Contract Templates, there are important information which should be incorporated in a mortgage agreement. The following elements are:
- Interest Rate – As a borrowing party, make sure that the interest rate does not exceed the rate quoted by the lending institution. Take into account if the rate is fixed or adjustable during the mortgage.
- Penalties – There should be a statement on the contract if there are penalties if a borrower pays off the loan amount earlier than the set period of time.
- Amortization – This pertains to the amortization plan prepared by the institution for the mortgage. A fully amortized loan entails a completely paid off contract.
Mortgage Brokerage Agreement
Mortgage Broker Agreement
Using Mortgage Templates
As the mortgagee, you must generate a contract that would satisfy the needs of the institution without sacrificing the interests of the mortgagor. The following are description of the types of Free Contract Templates samples provided on this website:
- General Mortgage Contract – This is the contract format being used by most institutions dealing with mortgage. There are spaces to fill out the information needed along with the general agreement format of the mortgage contract.
- Mortgage Sale – This pertains to the sale of the mortgaged asset to pay the outstanding mortgage balance. This applies to financially distressed borrower having less outstanding balance on the mortgage.
- Mortgage Brokerage – With the onset of competition in mortgage loans, a broker is instilled by the lending institution to be an intermediary in dealing with mortgage deals.
- Mortgage Purchase – This entails a transfer of mortgage interests and rights between institutions after a purchase is made.
In order for a borrower to acquire the needed money from the creditor, he must secure a pledge for the loan. Mortgage contracts are legal documents which is the reason why proper preparation of the contract must be made and agreed by the parties involved. These downloadable sample templates can be your reference as to what a mortgage agreement should be represented on a mortgage contract.