Mortgage, loan and property. What is a mortgage?

A mortgage is putting a property as a guarantee to a lender as a security for a mortgage loan.

While a mortgage in itself is not a liability or a dept, it is evidence of a debt. It is a transfer of an interest in property, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the property when the terms of the mortgage have been satisfied or concluded.

In other words, the mortgage is a guarantee for the loan that the lender makes to the borrower. In all but a very few states, a mortgage creates a lien on the title to the mortgaged property.

Friday, July 17, 2009

Surprise increase in construction in the United States

Coming back from vacation, and going back on vacation, but in the mean time... I am happy to tell you that construction of new homes reached a peak of seven months in the United States in June, a sign that builders are beginning to regain confidence.

The Commerce Department said Friday that housing starts jumped 3.6% last month. This gives a total of 582 000 units according to the figures, which exclude seasonal variations. It is a leap of 14% in construction of single family homes, which explains the increase.

The data is more interesting than the analysts' forecasts, which projected 530 000 units, and the low of 479 000 reached in April.

Another encouraging sign is in applications for building permits, an indicator of future activity. They rose 8.7% in June, giving an annual rate of 563 000 units. Economists consulted by Thomson Reuters were expecting 520 000.

Figures on Friday are very interesting because during the last three years, the real estate market simply crashed, crashed, and crashed again. Collapse or recovery has a significant impact on the rest of the economy.

However, analysts prefer to wait before predicting that real estate really restarted because the United States economy lost more jobs and because house prices are still declining. Also, seizures and stockpiles of unsold homes are still high.

The National Association of Home Builders said Thursday that its market index rose two points to 17 in July, the highest level for about a year. Any figure under 50 indicates a negative feeling. Beyond 50, the feeling is positive. The last time the index rose was in April 2006.

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