What does mortgagee

What Is A Mortgagee Clause? Mortgagee Clause Definition A mortgagee clause is a protective provisional agreement between a mortgage lender the mortgagee and a property insurance provider. Get approved to buy a home. Start My Application. Mortgagee Vs. See What You Qualify For. Related Resources. Read More.

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What Is A Mortgage? Here's an explanation for how we make money. Founded in , Bankrate has a long track record of helping people make smart financial choices. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.

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A mortgage is a loan from a bank or other financial institution that helps a borrower purchase a home. The collateral for the mortgage is the home itself. A mortgage loan is typically a long-term debt taken out for 30, 20 or 15 years. Over time, more of your payment will go toward the principal.

If you default on your mortgage loan, the lender can reclaim your property through the process of foreclosure. The principal is the specific amount of money you borrowed from a mortgage lender to purchase a home. The interest , expressed as a percentage rate, is what the lender charges you to borrow that money.

In other words, the interest is the annual cost you pay for borrowing the principal. There are other fees involved in getting a mortgage besides interest, including points and other closing costs. Your lender typically collects the property taxes associated with the home as part of your monthly mortgage payment. The money is usually held in an escrow account , which the lender will use to pay your property tax bill when the taxes are due.

Homeowners insurance provides you and your lender a level of protection in the event of a disaster, fire or other accident that impacts your property. Your lender collects the insurance premiums as part of your monthly mortgage bill, places the money in escrow and makes the payments to the insurance provider for you when the premiums are due.

Your monthly mortgage payment might also include a fee for private mortgage insurance PMI. A mortgage is essentially a lien , or claim, on the title to your home, explains David Carey, vice president and residential lending manager at Tompkins Mahopac Bank in Brewster, New York.

The money you get usually is tax-free. When you die, sell your home, or move out, you, your spouse, or your estate would repay the loan. Sometimes that means selling the home to get money to repay the loan. There are three kinds of reverse mortgages: single purpose reverse mortgages — offered by some state and local government agencies, as well as non-profits; proprietary reverse mortgages — private loans; and federally-insured reverse mortgages, also known as Home Equity Conversion Mortgages HECMs.

If you get a reverse mortgage of any kind, you get a loan in which you borrow against the equity in your home. You keep the title to your home. Instead of paying monthly mortgage payments, though, you get an advance on part of your home equity.

When the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence, the loan has to be repaid. In certain situations, a non-borrowing spouse may be able to remain in the home.

Here are some things to consider about reverse mortgages:. As you consider whether a reverse mortgage is right for you, also consider which of the three types of reverse mortgage might best suit your needs. Single-purpose reverse mortgages are the least expensive option. These loans may be used for only one purpose, which the lender specifies. For example, the lender might say the loan may be used only to pay for home repairs, improvements, or property taxes. Most homeowners with low or moderate income can qualify for these loans.

Proprietary reverse mortgages are private loans that are backed by the companies that develop them. If you own a higher-valued home, you may get a bigger loan advance from a proprietary reverse mortgage. So if your home has a higher appraised value and you have a small mortgage, you might qualify for more funds. HECM loans can be used for any purpose. HECMs and proprietary reverse mortgages may be more expensive than traditional home loans, and the upfront costs can be high.

How much you can borrow with a HECM or proprietary reverse mortgage depends on several factors:. In general, the older you are, the more equity you have in your home, and the less you owe on it, the more money you can get.

Before applying for a HECM, you must meet with a counselor from an independent government-approved housing counseling agency. Some lenders offering proprietary reverse mortgages also require counseling.

The counselor also must explain the possible alternatives to a HECM — like government and non-profit programs, or a single-purpose or proprietary reverse mortgage.

The counselor also should be able to help you compare the costs of different types of reverse mortgages and tell you how different payment options, fees, and other costs affect the total cost of the loan over time. You can visit HUD for a list of counselors , or call the agency at With a HECM, there generally is no specific income requirement.