How does a home mortgage work?

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If you borrow money from a bank for a home loan, does the home belong to you or the bank?
If you default on the loan, and the bank sells the home for a higher price than the total owed, do they return the balance to you, or the banks keep it? Or do they distribute the gains as proportion to the percentage of the ‘home you supposedly’ own at that time in relation to the bank?
Are all home loans on a reducing basis, i.e you own the least amount on the home in the earlier repayment years, after fees, just like an insurance policy? What is the average proportion to home payment percentage on a 20 year loan, i.e how much goes to paying your loan, and how much you own in the 5, 10 and 15 years of your loan?
Do people have to pay off the entire loan amount if they can sell for a higher price, or do they have to default on the loan to sell the house?

If you default on a loan, are you legally responsible for the entire loan amount, or the bank takes the losses if a foreclosed home sells for a lower price?

1 Comment
  1. Reply
    Casey Y
    February 14, 2014 at 1:03 am

    The home belongs to you. The bank holds a loan with the home as collateral. You obviously don’t like banks and are associating collateral with ownership, which is incorrect.

    You always own the home, unless you cease to make payments and the bank forecloses in order to recoup their money. If this happens, they get everything and if they cannot make themselves whole, you still owe the balance. If your home is worth more than the outstanding loan, you can sell it and take the difference before foreclosure though.

    “If you default on a loan, are you legally responsible for the entire loan amount,” Is this really a question you need to ask?

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