Title:
A Short History
Of The Mortgage
Word Count:
471
Summary:
Most people know
what a mortgage is, due to the fact that many people have one. But, do you know
how the mortgage itself came about? Here is some basic history on the mortgage
and where it came from:
In the beginning, a mortgage was just a conveyance of land for a fee. The buyer
paid the seller a set rate, with no interest, and the seller would sign over
the land to the buyer. There were usually conditions that had to be met before
the land would be the property of the buy...
Keywords:
Article Body:
Most people know
what a mortgage is, due to the fact that many people have one. But, do you know
how the mortgage itself came about? Here is some basic history on the mortgage
and where it came from:
In the beginning, a mortgage was just a conveyance of land for a fee. The buyer
paid the seller a set rate, with no interest, and the seller would sign over
the land to the buyer. There were usually conditions that had to be met before
the land would be the property of the buyer, just like today, but usually it
was based upon the assumption that the land would produce the money to pay back
the seller. So, a mortgage was written due to this fact, and the mortgage
stayed in effect no matter if the land produced or not.
But this old arrangement was very lopsided in that the seller of the property,
or the lender who was holding the deed to the land, had absolute power over it
and could do whatever they liked, which included selling it, not allowing
payment, refusing payoff, and other issues which caused major problems for the
buyer, who held no ground at all. With time, and blatant abuse of the mortgage
system, the courts began to uphold more of the buyer's rights so that they had
more to stand on when it came to owning their land. Eventually, they were
allowed to demand the deed be free and clear upon the payoff of the property.
There were still steps taken to ensure that the seller still had enough rights
to keep their interest safe and make sure that their money was paid.
In the U.S., some states have created their own version of the mortgage, which
is why they are referred to as “lien states”. In England and Wales, the Law of
Property Act of 1925 created a close parallel to the U.S.'s stance on
mortgages. In 1934, mortgages began to be widely used again in the U.S., and
the Federal Housing Administration helped to lower the down payments on homes
to make it easier for buyers to purchase a home. During that time, around 40%
of people in the United Sates owned homes. Now, that number is closer to 70%,
due to the lower interest rates.
Although mortgages today have evolved into many different forms, they are still
basically the same essential contract that they were in the beginning. Now,
there are many more laws and regulations to help protect the buyer, seller, and
creditor. There are also many different ways to lock in a low interest rate,
you just need to talk to your mortgage broker about what the rates are now and
what kinds of programs they offer to keep those interest rates low throughout
the life of your loan.