Mortgagor Vs. Mortgagee: What’s The Difference?

Kelli Pate is a full-time copy editor and freelance writer who has written for CreditCards.com, Bankrate, MoneyGeek, DailyWorth, Vox.com, Entertainment Weekly, and Mic, among other publications. When she's not busy recalculating her F.I.R.E. number o.

Kelli Pate is a full-time copy editor and freelance writer who has written for CreditCards.com, Bankrate, MoneyGeek, DailyWorth, Vox.com, Entertainment Weekly, and Mic, among other publications. When she's not busy recalculating her F.I.R.E. number o.

Kelli Pate is a full-time copy editor and freelance writer who has written for CreditCards.com, Bankrate, MoneyGeek, DailyWorth, Vox.com, Entertainment Weekly, and Mic, among other publications. When she's not busy recalculating her F.I.R.E. number o.

Kelli Pate is a full-time copy editor and freelance writer who has written for CreditCards.com, Bankrate, MoneyGeek, DailyWorth, Vox.com, Entertainment Weekly, and Mic, among other publications. When she's not busy recalculating her F.I.R.E. number o.

Chris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a n.

Chris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a n.

Chris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a n.

Chris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a n.

| Loans & Mortgages Editor

Updated: Jul 26, 2023, 12:56pm

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For new and prospective homebuyers, the path to homeownership is littered with potentially confusing jargon. What’s an adjustable-rate mortgage (ARM)? Are the annual percentage rate (APR) and interest rate the same thing? Why do you need both an appraisal and an inspection?

Some basic terms you’ll want to familiarize yourself with at the outset are mortgagor and mortgagee. Understanding the differences between these two roles will help prepare you for your responsibilities during the homebuying process—and, hopefully, make getting a mortgage easier.

Who Is the Mortgagee?

The mortgagee refers to the bank, financial institution or private mortgage lender that lends money to a borrower to purchase or refinance a home. They hold a legal interest in the property as collateral for the loan until it’s fully repaid. If the borrower fails to repay the loan, the mortgagee has the right to foreclose on the home and sell it to recover the outstanding debt.

As the party providing the mortgage loan, the mortgagee has several responsibilities, such as:

• Loan origination. The mortgagee is responsible for evaluating loan applications, conducting credit checks and determining the borrower’s eligibility for the mortgage. They assess the borrower’s financial situation, employment history, creditworthiness and other relevant factors.
• Disbursement of funds. Once the home loan is approved, the mortgagee disburses the funds to the title company, which holds them in escrow until closing is complete. The funds are then sent to the home seller.
• Loan servicing. Unless the mortgage is transferred to a third-party company, the mortgagee is responsible for loan servicing, which includes collecting monthly mortgage payments and providing account statements to the borrower.
• Escrow management. In some cases, the mortgagee may also manage escrow accounts. Part of the borrower’s monthly mortgage payment is set aside in escrow for property taxes and homeowners insurance premiums. Using those funds, the mortgagee pays on the borrower’s behalf when the bills become due.
• Default and foreclosure. If the borrower fails to make payments, the mortgagee has the right to take legal action that may include initiating foreclosure proceedings, which can result in the repossession and sale of the property to recover the outstanding debt.

Who Is the Mortgagor?

The mortgagor, also known as the borrower, buyer or homeowner, is the individual who obtains a mortgage from the mortgagee. In other words, the mortgagor is the party that seeks financing to purchase or refinance a property and pledges the property as collateral for the loan.

Like the mortgagee, a mortgagor has several responsibilities when obtaining a home loan, including:

• Repayment. The mortgagor’s primary responsibility is to make timely and regular payments toward the mortgage loan. This includes paying the principal amount borrowed as well as interest.
• Property maintenance. The mortgagor is responsible for maintaining the home that serves as collateral for the loan. This includes keeping the property in good condition and complying with any homeowners association rules, such as paying dues on time.
• Insurance and taxes. Typically, the mortgagor is responsible for obtaining and maintaining homeowners insurance coverage to protect against potential damages. Additionally, you must pay property taxes as they become due.
• Communication with the mortgagee. It’s important for the mortgagor to maintain open lines of communication with the mortgagee. This includes notifying them of any changes in contact information, financial circumstances or difficulties in making payments. If you encounter financial challenges, it may be possible to negotiate alternative payment arrangements with the mortgagee to avoid default and foreclosure.

Summary: Mortgagor vs. Mortgagee

While the mortgagor and mortgagee work closely together during the lending process, there are key differences in their roles and responsibilities.

To sum it up: The mortgagor—better known as the borrower—is the individual seeking financial assistance to acquire a property. On the other side of the equation stands the mortgagee, aka the lender.

Getting a handle on the homebuying process begins with understanding the relationship between the two. Here’s a quick breakdown of the two parties: