How to let your Money, Make you more Money

• Recorded Mortgages

  • • A recorded mortgage is a mortgage that has been officially filed with the local government (usually the county recorder, register of deeds, or land records office). Recording puts the public on notice that the lender has a legal claim (lien) against the property until the loan is paid off. 

• First vs. Second lien positions

  • • A lien is a legal claim against a property that secures a debt. The difference between a first lien and a second lien is primarily priority—who gets paid first if the property is sold or foreclosed. 

• Loan to Value (LTV) 

  • • a way lenders measure how much money they are willing to lend compared to the value of the property. It helps protect the lender by making sure there is enough equity in the property if something goes wrong. 

• Insurance

  • • When a lender is named on an insurance policy, it gives the lender financial protection because they have an interest in the property securing the loan.

    • The insurance company knows the lender has a financial interest in the property.

    • If there is a covered loss (such as a fire or flood), the insurer generally includes the lender on the insurance payment or pays the lender directly, depending on the circumstances and policy terms.

    • This helps ensure the insurance money is used to repair the property or pay down the mortgage rather than being spent elsewhere.

• Promissory Notes

  • • A promissory note is a legal document that proves the borrower owes money and promises to repay the loan under specific terms.

    • It is essentially the lender's written evidence of the debt.

The note establishes:

• The amount borrowed

• Interest rate

• Monthly payment amount

• Due date

• Length of the loan

• Consequences of missing payments

• A loan existed

• The borrower agreed to repay it

• The amount owed is documented

• Enforcement of Loan

  • •  If the borrower defaults, the lender may have legal remedies, such as:

• Demanding repayment of the remaining balance (acceleration)

• Pursuing legal action where allowed

• Using the mortgage or deed of trust to foreclose on the property