Disadvantages

• Collateral: Because the mortgage requires you to pledge the purchased property to the lender, if you default on the mortgage, the lender then has every right to foreclose upon the property and sell it to cover any outstanding money owed. You really need to make sure that when you have fully paid the mortgage, the lender releases its mortgage and makes any government filings to acknowledge this release.
  
  
• Defaults. There are many defaults that the lender may define, and these are basically events that will constitute the mortgage conditions being broken, and therefore defaulting on the mortgage. These may include failure to make payments on time, bankruptcy, insolvency and breaches of any obligations the lender may specify in the mortgage conditions. You will need to negotiate advance written warning of any alleged default, and also request a reasonable amount of time to cure the default.
  
  

Saturday, September 06, 2008