Mortgagor vs. mortgagee: What’s the difference?
Key takeaways
- The mortgagor is the person or entity who borrows and pays back a mortgage loan. If you’re getting a mortgage to buy a home, you’re the mortgagor.
- The mortgagee is the lender, such as a bank, credit union or online lender. This is the entity providing the funds via a mortgage to buy a home.
- The mortgagee determines if the mortgagor qualifies for the loan. Once the loan is taken out, the mortgagor begins repaying the mortgagee.
When purchasing a home with a mortgage, there are two parties involved, the mortgagor and the mortgagee. Here’s what those terms mean and how they apply to you as the borrower.
Who is the mortgagee?
Key terms
- Mortgagee
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A mortgagee is the lender or the party that originates a mortgage and provides funding — whether to help a borrower buy a home or refinance a mortgage.
The lender or mortgagee could be a bank, credit union or other financial institution that offers mortgages.
You might come across the term “mortgagee” in your loan documents and your homeowners insurance policy, specifically in the mortgagee clause.
As the mortgagee, the lender determines whether the borrower qualifies for a loan and, if so, how much to offer and at what interest rate.
While some lenders or mortgagees oversee loan repayments — a responsibility known as servicing — many transfer that job to a loan servicing company. When this happens, the lender, not the servicing company, is still considered the mortgagee.
What is a mortgagor?
Key terms
- Mortgagor
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A mortgagor is the applicant borrowing funds for the home purchase or refinance.
“The mortgagor is the person, couple or group of people seeking a loan to purchase a home — also known as the buyer, borrower or homeowner,” says Rob Heck, senior vice president of Revenue at Morty, a New York City-based online mortgage broker.
The mortgagor is responsible for:
- Repaying the loan on time as stipulated in the closing documents
- Paying homeowners insurance, property taxes and any other required payments, such as mortgage insurance
- Maintaining the home and property
- Communicating with the mortgagee if payment trouble arises
Mortgagee vs. mortgagor protections and rights
A mortgage includes various rights and protections for the borrower or mortgagor. These protections include basic rights like the right to renovate the home, as well as other protections like the right of redemption, or the right for a borrower to bring their loan current to prevent foreclosure.
In addition, the lender or mortgagee benefits from some protections. This includes the right to foreclose in the event the borrower stops making payments.
Mortgagor and mortgagee are just two of the key terms associated with a mortgage. If you’re applying for a mortgage, learn more about the terms that are part of the process such as amortization, APR and mortgage note.
