A mortgage debt is a kind of debt created by mortgage and secured by the mortgaged property. But what really is a mortgage? A mortgage is a kind of loan that people use to purchase real estate. It is actually a lien (a legal claim) on the home or property that secures the promise to repay the debt. Mortgages have two components: principal and interest. You can get a mortgage from a bank, a credit union, a mortgage company, or sometimes even a seller (or other private party) to buy or refinance a home. Nearly all mortgage loans have monthly payments that are due at the beginning of every month. Some loans have bi-weekly options. Included in each payment are the principal and interest. The amount borrowed is the principal. The interest is an amount calculated using the rate (percentage) that you must pay for the privilege of borrowing. Your mortgage payment is divided into paying off your principal and your interest. This process is called amortization. In the first years of your mortgage, almost all the money will go toward interest, allowing you a bigger income tax break.

After a mortgage loan has occurred and is not repaid as agreed mortgage foreclosure comes next. Your lender will now repossess your property and they have a legal duty to sell the property for the best price that can reasonably be obtained. The property will be for sale to the public, sometimes it goes to an auction house that will be open for bidding to the public.

So if you don’t want your property to be taken away from you, know your priorities. Pay your loan on time.