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You Closed On A House: Do You Or Your Lender Own It?

You Closed On A House: Do You Or Your Lender Own It?You were able to find a house and successfully close on it, so congratulations on becoming a homeowner! Then, you pause for a second and think: does your lender own your house? Some people believe that if they only put 20 percent down on a house, the lender actually owns the other 80 percent. Does this mean that your lender still owns a large portion of your house? This is not the case, but there are some caveats that you need to keep in mind.

Your Name Is On The Title

First, you are the one who owns the house. Your name is on the title, so you assume all of the benefits of owning the home. For example, if your home goes up in value between now and when you sell your home, you alone benefit from the capital appreciation of your home. Your lender isn’t suddenly entitled to more money just because your home is more valuable. You are the owner of your home, and your lender’s name should not be one anywhere on the title.

You Are Under A Legal Obligation To Pay Back Your Loan

Even though you own your home, your lender still has an important legal interest in your home. You are under a legal obligation to pay back your lender, and your lender can start legal proceedings if you do not pay back your loan. For example, if you fall behind on your mortgage payments, your lender can take legal action to repossess your house. This is called foreclosure, and you can be forcefully stripped of the title of your house. Stay on top of your mortgage payments to prevent this from happening.

After The Mortgage Is Paid Off

After the mortgage is paid off, your lender can no longer start the foreclosure process because you do not owe any additional money. On the other hand, other entities could foreclose on you if you do not pay your bills. For example, the government could take your home if you do not pay your real estate taxes from time to time. The laws vary from state to state, so try to familiarize yourself with the laws in your area.

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