A Chattel Mortgage is a type of mortgage that you can buy and sell. They are called Chattel Mortgages because you are purchasing the property, not a loan to purchase it.
In other words, when you take out a Chattel Mortgage on your home, what you’re getting from the bank is ownership of your house until you decide to sell it back to them by paying off the balance owed on the contract. This article digs deeper into what it’s all about and how beneficial it can be.
What is a Chattel Mortgage?
A Chattel Mortgage is a loan you incur to purchase or refinance your home. With the Chattel Mortgage, you are not borrowing money to buy real estate; instead, you are using the property as collateral to borrow money.
After you purchase or refinance your home, the bank that gave you the Chattel Mortgage will become the legal owner of your house.
The bank can sell your house when it chooses to and keep any money beyond what you owe on the mortgage. When you make your monthly payments, they will go toward the balance of what you owe.
How a Chattel Mortgage Works
A Chattel Mortgage contract is a promissory note with two components: an instrument and a mortgage. The instrument is similar to a car loan or any other loan type with an interest, principal, and security attached.
The instrument outlines the amount of money you are borrowing, when your first payment is due, and what happens if you miss a payment. If you want to compare different chattel mortgage quotes, you can do so online. Some platforms have a pool of various providers around your place.
The security part of the contract defines who has rights to any property used as collateral for your loan. If you fail to pay off the Chattel Mortgage, the bank will fully own your home. The bank can then sell your home at any time because you no longer have a claim to the property.
Benefits of Chattel Mortgages
A Chattel Mortgage is beneficial for someone who wants to own their house and use it as collateral without dealing with a traditional mortgage. The benefits include:
- Rapid approval times – A Chattel Mortgage does not require a lot of documentation, allowing the bank to make a decision more quickly.
- A Chattel Mortgage does not require a lot of documentation, allowing the bank to make a decision more quickly. Quick closings – Because of their simplicity, Chattel Mortgages almost always close within 30 days.
- Because of their simplicity, Chattel Mortgages almost always close within 30 days. Favorable interest rates – Chattel mortgages have a lower interest rate than other types of mortgages because the bank has a greater chance of being paid in full.
- Chattel mortgages have a lower interest rate than other types of mortgages because the bank has a greater chance of being paid in full. Unlike other mortgage types, there are no prepayment penalties.- You can sell or refinance your home at any time.
- Chattel Mortgages are available for nearly anyone looking to buy a house, even if you have bad credit.
How do I Get a Chattel Mortgage?
A Chattel Mortgage is similar to an unsecured loan because collateral makes up the bulk of the bank to give you the money. Getting a Chattel Mortgage has never been easier because banks specialize in giving out these loans. This type of loan is usually available for people who have had their share of late payments, foreclosure, or bankruptcy in the past.
Chattel Mortgages are beneficial for someone who wants to own their house and use it as collateral without dealing with a traditional mortgage. The benefits include rapid approval times, quick closings, favorable interest rates, and no prepayment penalties.
Getting this loan has never been easier because there are banks specializing in giving out these loans; all you need to do is find one near you.