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Most people know what a mortgage is, because many people have one. But, do you know how the mortgage itself came about? Here are some of the basic history of the mortgage and where it came from:
At first, the mortgage was simply a transfer of land for a fee. The buyer paid the seller a set price, without interest, and the seller signed the land over to the buyer. There were usually conditions that had to be met before the land could become the property of the buyer, just as there is today, but usually they were based on the assumption that the land would produce money to pay back to the seller. Therefore, the mortgage was written because of this fact, and the mortgage remained in effect regardless of whether the land was productive or not.
But this ancient arrangement was very unbalanced in that the seller of the property, or the lender who held the title to the land, had absolute power over it and could do as he pleased, including selling it, not allowing payment, and refusing to pay. , and other issues that caused great problems to the buyer, which had no basis whatsoever. With the passage of time, and the blatant abuse of the mortgage system, the courts have begun to uphold more rights of the buyer so that they have more to stand on when it comes to owning their own land. In the end, they were allowed to demand that the bond be free and clear when paying for the property. There are still steps taken to ensure that the seller still has sufficient rights to keep his interest secure and ensure that his money is paid.
In the United States, some states have created their own version of the mortgage, which is why they are referred to as “franchise states.” In England and Wales, the Property Act 1925 established a close analogy with the position of the United States on mortgages. In 1934, mortgages began to be widely used again in the United States, and the Federal Housing Administration helped lower down payments on homes to make it easier for buyers to purchase homes. During that time, about 40% of people in the United States owned homes. Now, that number is closer to 70%, because of the lower interest rates.
Even though mortgages today have evolved into many different forms, they are still basically the same basic contract that they were in the beginning. Now, there are many laws and regulations to help protect the buyer, seller, and creditor. There are also many different ways to secure a low interest rate, just talk to your mortgage broker about current rates and what types of programs they offer to keep interest rates low for the life of the loan.
