What Is a Mortgage Agreement?

When you finally close on your home loan you'll have many different forms and contracts to read over and sign to make things official. One of these contracts is your mortgage agreement. The mortgage agreement is a binding contract required for just about any basic mortgage loan for a home.

The Mortgage

A mortgage is not the loan money that transfers hands from the lender to the seller in a real estate transaction. It's the interest in the home itself. It is a pledge from the new homeowner that in case of default, he gives up his claim to the property to the lender. The official name for this pledge is a property lien. Keep this fact in mind as you seek to understand the purpose of the mortgage agreement.

The Agreement

The mortgage agreement is a contract made between the lending bank, called the mortgagee, and the borrower, called the mortgagor. This agreement states that the borrower receives the funds she needs to purchase the home while the lender receives a lien to the property. It allows the borrower to take physical possession of the house as she pays off the loan. If the mortgagor defaults on the terms of the loan, this agreement gives the mortgagee the right to take possession back.


Though the exact language of the contract varies by lender, you'll find a few common sections in most standard mortgage agreements. For one, the mortgage agreement lists basic information that the mortgagor agrees to regarding the loan, including the amount borrowed and any additional costs associated with the loan. It commonly makes reference to other loan documents in the closing paperwork that set forth the exact terms of the loan, including repayment term, payment, and interest rate associated with the mortgage.


Without this agreement the loan isn't officially a mortgage loan. Its just a standard promissory agreement where one party promises to pay the other in regular installments until the obligation is paid in full. Both parties (the bank representative and the principal borrowers) must sign the agreement in the presence of a notary public. Also, the lender must file this mortgage agreement with the county where the property is located so that the county administrator can update public records.


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Louise Balle has been writing Web articles since 2004, covering everything from business promotion to topics on beauty. Her work can be found on various websites. She has a small-business background and experience as a layout and graphics designer for Web and book projects.