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What is a Conventional Mortgage? A Comprehensive Legal Overview
Definition & Meaning
A conventional mortgage is a legal agreement where a borrower uses their real property as collateral for a loan. This agreement is documented in a promissory note, which outlines the terms of the loan. The mortgage must be signed by the borrower, acknowledged by a notary public, and recorded with the appropriate county office, such as the County Recorder or Recorder of Deeds. If the borrower defaults on payments, the lender has the right to foreclose on the property, which may lead to a public sale to recover the owed amount.
Table of content
Legal Use & context
Conventional mortgages are primarily used in real estate transactions. They fall under the realm of civil law and are essential for home buyers seeking financing. Borrowers can manage the process themselves using legal templates from resources like US Legal Forms, which provide the necessary documentation for mortgage agreements and related procedures.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A home buyer secures a conventional mortgage to purchase their first home. They sign the mortgage agreement, which is then recorded with the county. If they miss several payments, the lender may initiate foreclosure proceedings.
Example 2: A borrower sells their property "subject to a mortgage," meaning the buyer takes ownership while the seller remains liable for the mortgage payments. (hypothetical example)
State-by-state differences
Examples of state differences (not exhaustive):
State
Mortgage Type
Foreclosure Process
California
Deed of Trust
Non-judicial foreclosure
New York
Conventional Mortgage
Judicial foreclosure
Texas
Deed of Trust
Non-judicial foreclosure
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Conventional Mortgage
A loan secured by real property with standard terms.
Typically not insured by government agencies.
FHA Loan
A government-backed loan designed for low-to-moderate income borrowers.
Insured by the Federal Housing Administration.
VA Loan
A loan backed by the Department of Veterans Affairs for eligible veterans.
Offers favorable terms without a down payment.
Common misunderstandings
What to do if this term applies to you
If you are considering a conventional mortgage, start by researching lenders and comparing terms. Ensure you understand the responsibilities involved, including payment schedules and potential foreclosure risks. For assistance, explore US Legal Forms for ready-to-use legal templates that can help you navigate the process. If you face difficulties or have complex questions, consulting a legal professional is advisable.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.
Typical loan amounts: Varies based on property value and lender.
Jurisdiction: Governed by state law.
Possible penalties: Foreclosure and loss of property.
Key takeaways
Frequently asked questions
A conventional mortgage is a loan secured by real property, typically not insured by government agencies.
If a borrower defaults on their mortgage payments, the lender can initiate foreclosure, which may result in the sale of the property to recover the owed amount.
Yes, you can sell your property "subject to a mortgage," meaning the buyer takes ownership while you remain responsible for the mortgage payments.
Contact your lender immediately to discuss options, such as loan modification or repayment plans, to avoid foreclosure.
You can find ready-to-use legal templates for mortgages at US Legal Forms, which can help streamline the process.