The major two parties that participate in any home mortgage loan transaction are the home mortgage loan borrower, and the home mortgage loan lender. The seller of the property plays a significant role during this scenario, but not really as much as the borrower or the lender. So what exactly are the roles of both the borrower, and the lender?
The borrower of the home mortgage loan is the party that receives the necessary funds from the lender in order to buy the property from the seller. This is no different than most conventional loan arrangements, in that a borrower receives funds from a lender in order to purchase some product. The major difference present with any home mortgage arrangement is the fact that the borrower provides the property he or she is purchasing as collateral to the lender, even though that borrower is the one purchasing the property. The mortgage then comes into the picture, because the mortgage is the technical name for the security provided to the lender as collateral. The mortgage enables the borrower to acquire the funds from the lender, because by providing the lender with a mortgage on the property, the lender can then fail safe making such a large loan.
The borrower typically still has to pay a substantial percentage of the final sale price of the property to the lender, and this is what is known as the down payment. This amount can vary from anywhere between thirty, to sometimes zero percent. If the borrower has enough money for the down payment, and meets all of the other requirements of the lender, he or she should get approved for the home mortgage loan, and will then have to make payments for the entire life of the loan. If the borrower doesn't fulfill these debt obligations, the mortgage enables the lender to begin the foreclosure process, and take control of the property. The lender has the legal right to do this vis-à-vis the mortgage, and given this right they feel secure making such large loans to borrowers. Both borrowers and lenders need to become well-versed in both parties' roles during any mortgage scenario, as both play a critical role in the establishment of any home mortgage loan.