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Is A Mortgage A Lien?

There are two ways you can buy a home: through cash or mortgage. You’re paying for the property over time instead of in one transaction when taking out a mortgage. But is a Mortgage a Lien? 

Yes, a mortgage is a lien. Taking a mortgage for your home allows the lender to place a mortgage lien on the property. This means the lender can reclaim the means if you cannot make the required payments or you default the loan. 

Throughout this article, we’ll explain how a mortgage affects you as a homeowner. While it may seem daunting at first, taking out a mortgage does benefit you in the long run. Continue reading to find out how. 

Is A Mortgage A Lien?

A mortgage is when you take out a lien on your property in real estate terms. In layman’s terms, you’re borrowing your home by taking out a loan. Once you sign a mortgage for your home, you agree to the bank that you can pay the loan off in timely payments. 

A lien is a legal right that the lender has over your property. If you do not pay off your monthly mortgage fees, they have the right to reclaim your property. However, their rights don’t give them full possession of your home. 

Because of that, you won’t be seeing your mortgage banker moving into your house. You can extinguish the lien by fully paying off the remaining debt on the property or by agreeing to the promissory note’s arrangement.

As a homeowner, you have the right to retain property ownership as long as you pay the mortgage fees. Usually, mortgages have laws that prevent lenders from visiting, occupying, or using the property that’s under the lien. 

If you cannot pay back the mortgage lien, the lender will start to take legal procedures to reclaim your property. This is when the foreclosure stage occurs. When someone defaults on a lien, that means they were unable to make their payments on time. 

The lender will state that you have defaulted on the lien throughout the foreclosure process. They will either place your house up for sale or take possession of the property to reclaim the outstanding debt owed. 

Fortunately, you can reclaim your property before it reaches the sheriff’s sale deadline. If not, then the lien will override your property rights, and you’ll be forced to vacate the premises. 

How to Pay off a Mortgage Lien

So you’re probably asking yourself, “How Do I Pay off a Mortgage Lien?”. The easiest way is to pay off your lien in full. Then, the release of Lien forms can be signed, which gives you evidence that you’ve paid off the lien. 

Remember, a lien is basically a property loan, so you have to pay it off quickly, or else your lender can place it under foreclosure. Try to speak with your lienholder to settle the matter. 

The house settlement process will vary depending on the relationship between the borrower and the lender, the lien’s value, and the type of lien that’s held on your property. If both parties can settle on an agreed payment plan, the lienholder might take off the lien. 

Remember, liens are directly tied to the property and not the owner. Because of this, property holders can free themselves from the lien if they sell the home. 

However, there are some disadvantages to taking this route. While the property owner can receive gains from the sale, they have to pay most of it to the lienholder. Most buyers don’t buy homes with claims on them, making it more difficult to sell the foreclosed property. 

Benefits of a Mortgage

Tax-Deductible Interest 

When taking out a mortgage lien, you pay a monthly interest rate. When you file taxes annually, the interest from the lien can be classified as a deductible. This means that you’re obtaining money from the mortgage in the long run. 

Cash Reserves

While you can buy your house in cash, taking out a mortgage gives you cash reserves for daily life needs. If you have any financial issues or unexpected emergencies, you’ll be rest assured that your money is in a bank and not tied to your property. 

You should always have at least 1-3 months of emergency savings available. If your house is destroyed, you will have to wait for insurance to receive payment. Through a mortgage, you can relocate because you have immediate funds. 

Alternative to Cash Buying

Most of the time, people don’t have the cash to 100% own the property. Based on the size, area, and additional factors, you might not be able to buy the house outright. 

Mortgages are a quicker, cost-efficient way of buying a home. You’re paying off the lien with monthly payments while your house value increases. Because of this, you’ll be able to gain profit from your home while building equity. 

Things to Consider When Taking Out a Mortgage

Interest Rates

The interest rate will affect the total mortgage’s cost. Choosing a convertible, variable, or fixed rate changes how much you pay monthly. Before taking out a mortgage, see if the interest rate is good for you.

If you have variable interest, the rates might increase over time. The interest rate can still change for fixed rates if you take out a new mortgage. Increased interest rates will make your mortgage payment more expensive over time.

Late Payment Penalties

When taking out a mortgage, a lender will charge late fees and penalties if it’s not paid off on time. If you keep making late payments, the lender will not allow you to renew the mortgage. 

Pre-Payment Penalties

You can receive a pre-payment penalty when you overpay a mortgage lien above schedule. Make sure you speak to your lienholder to see if any laws are preventing you from doing so. 


Conclusively, it is up to you to handle your mortgage liens each month. As a homeowner, paying off the lien over time is a great way to establish trust in your banks and create equity. So always keep your mortgage payments low to ensure that you can retain ownership in your house in the long term.