Buying a home is a huge undertaking that, unfortunately, many people do not educated themselves enough on before they venture into what will ultimately become one of the biggest — if not “the” biggest — purchase of their lifetime. Too often potential buyers find themselves being bullied into signing mortgages that they really can’t afford because they don’t understand the language involved and are too nervous to ask for explanations before signing on the dotted line.
Instead of falling victim to a binding legal agreement that you can’t uphold simply because you didn’t understand what you were agreeing to, become as familiar as possible with language of real estate law and lending practices. To help familiarize yourself with the terms most frequently used, Ahmad Sulaiman, a real estate attorney in Illinois defines some of those key terms:
Buyer: In terms of real estate, the homeowner is both the buyer and the borrower. You are taking the money from your lender and using it to purchase your new home.
Counter claim: When entering foreclosure, you are essentially being sued by the lender for the amount that you owe. The homeowner can then in turn make a counter claim and sue the lender for illegal actions that took place in the borrowing or repayment process.
Foreclosure: An attachment on your mortgage that allows your lender to repossess your home if you fail to make interest and/or principle payments on your mortgage.
Lender: Any entity who loans money in exchange for a greater return is considered a lender. When it comes to purchasing property, banks are a primary example of a lender because they provide you with money that you must pay back over time with added interest.
Lien: A note or promissory that gives a creditor the right to secure the payment of an owed debt by the sale of the homeowner’s property. If you have multiple lenders, then you will have multiple liens on your home.
Mortgage: This is the contract between the borrower and the lender that serves as an obligation for repayment of a debt. Often you will hear people talk about their mortgage payments. Essentially, this is the amount that they owe their bank each month as a part of the repayment plan for the loan used to pay for their home.
Mortgage arrearage: When you fall behind on your payments and are unable to repay your debt to the lender, that past due amount becomes the arrearage.
Secondary lender: If the loan given to you by your lender (usually the bank) is not enough to cover the cost of your home, then you will need to borrow money from another entity. This second unit is then considered to be your secondary lender. Just like your primary lender, they have loaned you money with the expectation that you will repay the amount with interest.
While understanding what real estate agents, lenders and attorneys are talking about is a great start, if you are still unsure about all of the legal responsibilities associated with purchasing a home it can be helpful to contact a lawyer in your area. Or, if you have already purchased a home but find that you are struggling to make your monthly payments, then it is also in your best interest to contact a lawyer before you fall too far into debt. A qualified attorney will be able to review your mortgage and your loan to assess if any illegal actions that took place and provide you with your best options for moving forward.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
