Mortgage Provisions are a Mystery to Most Borrowers
One result of the recent housing boom is that more people than ever are taking out mortgage loans. Many of these are first time home buyers who have never taken out home loans before. Others are current homeowners taking out exotic mortgage loans that did not exist until recently. One characteristic common to virtually all homeowners today is that very few have even a passing understanding of the loans they are committing to. People spend countless hours researching the fuel consumption of the latest cars, or pore over websites like Expedia and Orbitz to save a few hundred dollars on their next vacation. Yet these same people spend hardly any time understanding what, to most, is the biggest financial commitment they will make in their lifetime--the mortgage loan.
There are certain features of a mortgage loan than even the most uninformed borrower usually knows about. Most know how much money they borrowed, whether it is a fixed or adjustable rate loan and then length of the loan. Beyond that, the drop is dramatic. For example, most people don't know about such features as "force placed insurance" or "private mortgage insurance." Many people don't even understand the "grace period" in a typical mortgage loan. I will try and include regular articles that discuss these and other provisions in a typical mortgage loan. A better understanding of these provisions will hopefully allow borrowers to deal more effectively with mortgage lenders and servicers.