A mortgage loan, also referred to as a mortgage, is used by purchasers of real property to raise funds to buy real estate; or by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged. The loan is “secured” on the borrower’s property. This means that a legal mechanism is put in place which allows the lender to take possession and sell the secured property (“foreclosure” or “repossession“) to pay off the loan in the event that the borrower defaults on the loan or otherwise fails to abide by its terms. The wordmortgage is derived from a “Law French” term used by English lawyers in the Middle Ages meaning “death pledge”, and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure.[1] Mortgage can also be described as “a borrower giving consideration in the form of a collateral for a benefit (loan).
Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants or an investment portfolio). The lender will typically be a financial institution, such as a bank, credit union or building society, depending on the country concerned, and the loan arrangements can be made either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably. The lender’s rights over the secured property take priority over the borrower’s other creditors which means that if the borrower becomes bankrupt or insolvent, the other creditors will only be repaid the debts owed to them from a sale of the secured property if the mortgage lender is repaid in full first.
In many jurisdictions, though not all (Bali, Indonesia being one exception[2]), it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed.
Refinancing may refer to the replacement of an existing debt obligation with another debt obligation under different terms. The terms and conditions of refinancing may vary widely by country, province, or state, based on several economic factors such as, inherent risk, projected risk, political stability of a nation, currency stability, banking regulations, borrower’s credit worthiness, and credit rating of a nation. In many industrialized nations, a common form of refinancing is for a place of primary residency mortgage.
If the replacement of debt occurs under financial distress, refinancing might be referred to as debt restructuring.
A loan (debt) might be refinanced for various reasons:
- To take advantage of a better interest rate (a reduced monthly payment or a reduced term)
- To consolidate other debt(s) into one loan (a potentially longer/shorter term contingent on interest rate differential and fees)
- To reduce the monthly repayment amount (often for a longer term, contingent on interest rate differential and fees)
- To reduce or alter risk (e.g. switching from a variable-rate to a fixed-rate loan)
- To free up cash (often for a longer term, contingent on interest rate differential and fees)
Refinancing for reasons 2, 3, and 5 are usually undertaken by borrowers who are in financial difficulty in order to reduce their monthly repayment obligations, with the penalty that they will take longer to pay off their debt.
In the context of personal (as opposed to corporate) finance, refinancing multiple debts makes management of the debt easier. If high-interest debt, such ascredit card debt, is consolidated into the home mortgage, the borrower is able to pay off the remaining debt at mortgage rates over a longer period.
For home mortgages in the United States, there may be tax advantages available with refinancing, particularly if one does not pay Alternative Minimum Tax.
Mesquite
Mesquite is a city in Clark County, Nevada, United States, adjacent to the Arizona state line and 80 miles (130 km) northeast ofLas Vegas on Interstate 15. As of 2015, the United States Census estimates that the city had a population of 17,496.[5] The city is located in the Virgin River valley adjacent to the Virgin Mountains in the northeastern part of the Mojave Desert. It is home to a growing retirement community, as well as several casino resorts and golf courses.
Mesquite was settled by Mormon pioneers in 1880, who called it Mesquite Flat. The community was finally established on the third attempt after having been flooded out from the waters of the Virgin River. The name was later shortened to Mesquite, and the city was incorporated in May 1984. Mesquite, like nearby Bunkerville, had its origins in farming. The Peppermill Mesquite casino, which opened in the 1970s, drove Mesquite’s diversified economy. [The Western Village Travel Plaza opened in the 1950s, later owned by the Peppermill [1].] The city incorporated in 1984 and established a master development plan during the early 1990s.[2] In the mid-1990s, more casinos opened.[6] By 2006, Mesquite was one of the fastest-growing small towns in the United States, though the late-2000s recession led to the closure of both the Mesquite Star and Oasis (formerly The Peppermill) casinos.[2]
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Mesquite occupies the northeast corner of Clark County and extends north into the southeast corner of Lincoln County. The eastern border of the city is the Arizona state line. The city is in the Virgin River valley, occupying the northern side of the river. The city lies adjacent to the Virgin Mountains in the northeastern Mojave Desert near the southern mouth of the Virgin River Gorge.