In our Mortgage Lingo 101 video series, we define commonly used mortgage terms in the industry. In this next episode, we define the term “Lien.”
What is a Lien?
You may hear this term used by a mortgage professional when they say, “We need to pay off the existing lien on your home,” or “This mortgage takes first lien position on your property.”
A lien is a claim made on a property in order to satisfy a debt. Liens are often applied to real estate, although other situations may exist. For the mortgage industry, we will explain how a mortgage affects a lien on a property.
Lien on Property
A mortgagee, such as Traditions Mortgage, will require a lien to protect their interests in the property. In the case of your homeowner’s insurance, also called hazard insurance, the mortgagee will require the insurance agent to list them in a lien position to ensure that the debt, or mortgage, will be satisfied in the case of the property loss.
In simpler terms, a lien protects the lender and is required for the duration of the mortgage term. Once the loan is paid off, the lien is removed.
For more information, contact our Traditions Mortgage team today!