Mortgagor vs mortgagee is an important distinction that you need to know if you are applying for financing.
In this article, we’ll break down the difference between these two terms and answer a few related questions that we receive from our members.
This article is part of our free series on credit essentials, ranging from how to get a credit card with an ITIN number to answering questions like what increases loan balance.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Mortgagor vs Mortgagee
- What Are the Legal Obligations of a Mortgagor?
- Frequently Asked Questions
- Ready to Open Accounts With Banks in the USA?
Mortgagor vs Mortgagee
The main difference between a mortgagor and a mortgagee is that the mortgagor is the borrower in a financing agreement while the mortgagee is the financier. In other words, in a traditional mortgage arrangement, the mortgagor is the individual purchasing the home while the mortgagee is the bank providing the loan to complete the purchase.
In certain instances, the mortgagee may also be an individual or company. This can be the case in a seller financing arrangement, where the financing to purchase the home is being supported by the previous owner of the home.
Alternatively, the mortgagee may be a mortgage company that specializes in home financing. In these cases, better interest rates can often be secured by the mortgagor.
That said, regardless of the source of the mortgage or the jurisdiction where the mortgage is being provided, the roles of the mortgagor as the borrower and the mortgagee as the financier are the same.
In most cases, the individual (or party) is required to submit a security deposit to demonstrate financial commitment. This is also known as earnest money and it indicates that the party intends to move forward with the purchase. Of course, conditions do apply and earnest money is refundable depending on the specific conditions written in the contract.
With this in mind, let’s take a look at the obligations of a mortgagor when it comes to securing and repaying a mortgage.
What Are the Legal Obligations of a Mortgagor?
The legal obligations of a mortgagor include fulfilling the specific payment terms under the mortgage agreement. This includes paying the agreed-upon amount over the agreed-upon period of time, paying any costs associated with maintaining the mortgage and paying for the necessary insurance that may be required by the mortgagee to protect their interests.
Mortgage agreements are different from lease and finance agreements, it’s important to understand the terms and conditions of each agreement and how they apply to your situation before applying.
Do You Want More USA Banking Insights?
Sign up here to receive our Free USA Banking Starter Guide. It’s designed to help non-residents with opening bank accounts at top financial institutions in the US.
Frequently Asked Questions
Below are three of the most common questions that we receive from people looking into a mortgagor vs mortgagee. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
Who Is Considered the Mortgagee?
The mortgagee is the financial institution providing financing in a loan agreement. For example, in a traditional mortgage, the mortgagee is the bank that is providing the capital to purchase a home. The other party to the financing arrangement is the mortgagor, which is the individual purchasing the home with bank financing.
Can the Mortgagor and Mortgagee Be the Same Person?
In certain circumstances, the mortgagor and mortgagee can be the same person. However, this would typically require a person to either borrow against their own assets that are held with a financial institution (e.g. Lombard loan) or through complex structures that would enable them to receive a mortgage through an entity that they control and self-financed.
Who Is Grantor or Mortgagor?
Grantor or mortgagor refers to the borrower, which is the individual securing financing in order to purchase an asset. In certain states and countries, they use different terminology. However, the specific obligations and rights of the mortgagor are consistent across most jurisdictions.
Ready to Open Accounts With Banks in the USA?
If so, you can get access to GlobalBanks USA (our dedicated US banking service) in just a few clicks.
GlobalBanks USA is a 100% personal account opening solution. It provides direct access to our team of US banking experts.
When you join, you receive…
+ Expert suggestions on where to open US bank accounts.
+ Step-by-step support to navigate opening US bank accounts.
+ Direct introductions to helpful and responsive bankers.
+ Plus, detailed guides to maximizing the value you get from your new US bank account.
And “yes!” GlobalBanks USA helps foreigners and non-resident individuals open bank accounts.
In fact, GlobalBanks USA even helps non-resident US LLCs and foreign & offshore entities.
To learn more about GlobalBanks USA, visit the product page to see how our team can help you successfully open US bank accounts!
