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What is a real estate mortgage?

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Individuals obtain mortgage loans to finance the purchase of their housing, using their real estate as collateral.  Although conventionally used to finance the real estate that serves as the collateral to secure the loan, a mortgage can secure the financing of other long-term assets, such as equipment, fixtures and the renovation of property.

A mortgage loan taken by individuals on residential property is a residential mortgage; a mortgage by a business on commercial property is a commercial mortgage.  Residential or commercial real estate so encumbered is said to be mortgaged.  Because portable dwellings, such as mobile homes and houseboats, are personal property – not real estate –real estate mortgage cannot be taken out on them and are finance with a chattel loan.

Real estate mortgages can be obtained from numerous sources, including savings and loan associations (thrift institutions) or building societies, credit unions, commercial banks, savings banks, mortgage bankers and brokers, life insurance companies, individual investors, property developers and government supported agencies.  Mortgages may be made either directly by the institution or indirectly through financial intermediaries.

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