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Mortgage loans for real estate

Published on July 31, 2024   9 min

A selection of talks on Finance, Accounting & Economics

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0:00
Welcome back to our series on Real Estate Economics. This is talk number eight, and the first talk on the general topic of real estate finance. I'm John McDonald. I'm an Emeritus Professor of Economics at the University of Illinois, Chicago, and an Emeritus Professor of Real Estate at Roosevelt University. The topic for this session is Mortgage Loans for Real Estate.
0:34
We'll be covering what is a mortgage loan, what types of loans are out there, how do the loans work, and finally, what could go wrong with that whole scheme?
0:50
What is a mortgage loan? A mortgage loan is a loan with a lender and a borrower. The contract specifies the amount of the loan and the procedures for paying off the loan. The borrower pays monthly and so on. The amount of the loan is the principal, and the borrower pays back the principal and pays interest. The mortgage pledges the property itself as collateral. I want you to understand that a mortgage is what the borrower gives to the lender pledging the property as the collateral. In other words, if the borrower fails to meet the terms of the contract, i.e. doesn't pay, then the lender can initiate a foreclosure process to take possession of the property. And that, depending on where you are, it could be a court procedure or it could simply be a law that the lender can exercise.

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