Almost everyone has seen the cheesy commercials for title pawns. A title pawn means borrowing against the worth of your car for a loan. If the loan is not paid back, then the title pawn place takes possession of the car. As we can see from the reality shows about repossession, it is not a nice thing. A lien on a mortgage is similar to a title pawn only on a grander scale.
A mortgage lien is a type of conditional ownership of your home that is claimed through a home mortgage lender. Liens are the basis of all mortgages; they use the house that you live in as collateral, ensuring that you pay your mortgage. When people apply for a second mortgage or a lien against the first mortgage, it is similar to borrowing against the equity of your home. In the world of real estate, any home can realistically have several loans or liens against it, though it is not advisable to bite off more than you can chew (or even remember to pay).
Types of Mortgage Liens
In the majority of cases, the mortgage lien is a home equity loan. Home equity loans allow a homeowner to borrow against the home based on the amount that the home is worth, less the mortgage still owed on the home. Home equity loans help to offer cash on hand, which can be helpful for many homeowners as a source of liquid funding. One lien that is possible in the U.S. is a tax lien by the Internal Revenue Services. If you have a tax debt that you have not paid, the IRS can take out a lien against your home for the amount owed in back taxes.
Paying Off a Lien
A regular mortgage lien can be paid off when you sell a home, if the sale price is enough to cover it. When there is a lien against a homes title (as in a tex lien), it must be paid prior to transfer of the title. In this case, the purchaser of the home will make an offer on the home and the money for the home sale will be used to satisfy the lien, if there’s enough. The lender who has the lien on the home can end up foreclosing on the home because of failure to make payments on the loan.
Foreclosure on a home is a legal process in which the mortgage lender seizes the home according to the terms of the mortgage contract.The foreclosure process will usually start after someone has not made several payments. They will be warned in writing prior to the foreclosure process commencing. Most people can avoid losing their home by keeping up with the obligations of your mortgage payments. Having trouble keeping up with two different loan payments is understandable. If you do ever have trouble paying your mortgage, speak with your lenders for a solution; they really don’t like foreclosure any more than you would.