There’s a lot to think about and learn when you’re about to buy your first house. The overall value, on their own, maybe very confusing. This is why it’s best before you start the process to learn what you can, so there won’t be any surprises. Mortgage and lien are two words that are bandied about and understanding the distinction is very important. A mortgage is, objectively speaking, a loan. That’s when the borrower is given money by a person or lender but expects it to be paid back. They also want something for their issue, which typically comes in the form of interest, or a percentage of the value of the loan taken into account in the repayment.

 

A lien is a claim on an asset that is legitimate. When one (a lien) is put on an asset in a secured loan, it may be part of the mortgage process. This legal argument states in the lending process that when a borrower wants a loan to purchase property, the lender has the legal right to take the property and liquidate it to make sure that the amount of money lent is recovered.

 

Two different types of loans are available – secured and unsecured.

 

Unsecured: Credit cards are a prime example of an unsecured loan. A bank issues a loan to the borrower that is paid back at a higher rate of interest. The higher rate stems from the fact that with collateral, the borrower does not guarantee the loan. Instead, the collateral is the capacity of the creditor to make payments.

 

Secured: The lender assesses the financial assets of the borrower, such as a checking and savings account, as well as their 401k, for a secured loan. That’s because they are significant and can be treated as collateral. In their loan application, the applicant lists these assets. The borrower should make sure that this does not mean that the borrower is putting a lien on these properties before signing the application.

 

A mortgage is an example of a secured loan. The value of the property the creditor plans to buy in this form of a loan becomes the collateral. This ensures that if payments are foreclosed by the borrower, the lender is repaid with the property being liquidated.

In order to recover default fees, additional entities may put liens on the land. These cases include car loans, overdue credit cards and to name a few, even federal income taxes.

If a creditor has a co-signer, if payments are not received, the party agrees to be liable. But if a borrower defaults on payments, in order to recover their money, the lender may put a lien on the properties of the co-signer. This also occurs when the lender requires the borrower to court, claiming that the money owing is due, and the court gives the lender a lien to the co-property signer’s to settle the lawsuit.

An example of this kind of situation would be when a person owes a landscaper for the services they have done, but because of a dispute, the person does not pay. The landscaper goes to court to recover their income, to place a lien on the property of the person or other asset that the court requires.

You’re better prepared to step on with the home-buying process if you know the difference between a mortgage and a lien.

 

Can a Lien affect my Property?

In order to recover default fees, additional entities may put liens on the land. These cases include car loans, overdue credit cards and to name a few, even federal income taxes.

If a creditor has a co-signer, if payments are not received, the party agrees to be liable. But if a borrower defaults on payments, in order to recover their money, the lender may put a lien on the properties of the co-signer. This also occurs when the lender requires the borrower to court, claiming that the money owing is due, and the court gives the lender a lien to the co-property signer’s to settle the lawsuit.

An example of this kind of scenario would be when a person owes a landscaper for the services they have done, but because of a conflict, the person does not pay. The landscaper goes to court to recover their income, to place a lien on the property of the person or other asset that the court requires.

You’re better prepared to step on with the home-buying process if you know the difference between a mortgage and a lien.