Definition: The word "mortgage" refers to an event or process where a borrower, also known as a lender, agrees to pay back money from the borrower's savings, investments, or credit cards for an asset. The term "conveyance," on the other hand, refers to the transfer of ownership and title of a property from one person to another, typically by deed in lieu of mortgage. In the context of real estate transactions, conveyance is crucial because it transfers title from the original owner (the seller) to the new owner or transferee (the buyer). This means that the borrower now has legal ownership over the asset being conveyed. The loan terms may also include a "conveyance" clause in case the property is sold by the buyer before the mortgage is fully repaid. For example, suppose a home loan was taken out for $500,000 with 30-year interest rate of 6%. The borrower makes a down payment of $200,000 to secure the remaining balance. If the property were sold after three years with no further payments from the buyer, the mortgage would be fully paid off before the title to the home would change hands. However, if the property is sold within six months of closing and then returned by the borrower (not required for a 30-year loan), there could be some paperwork adjustments or delays. Understanding these terms will help you better understand how real estate transactions work and make informed decisions in your financial planning.
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