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Mortgagee: Definition, What They Do, And Role In Homebuying Mortgagee: Definition, What They Do, And Role In Homebuying


Mortgagee: Definition, What They Do, And Role In Homebuying

Learn the definition and role of a mortgagee in homebuying. Discover how mortgagees in the finance industry help homeowners finance their dream homes.

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What is a Mortgagee?

When you’re ready to buy a home, you might have come across the term “mortgagee.” But what does it mean, and why is it important in the homebuying process? In this article, we’ll define what a mortgagee is, explain what they do, and outline their role in the homebuying journey.

Key Takeaways:

  • A mortgagee is a lender or financial institution that provides a mortgage loan to a borrower.
  • The mortgagee holds a legal interest in the property as collateral until the loan is fully repaid.

Now that we have an overview, let’s dive deeper into the role of a mortgagee and how they impact your homebuying experience.

The Role of a Mortgagee

1. Loan Provider: A mortgagee is primarily responsible for providing the funds that enable you to purchase a home. When you apply for a mortgage loan, you are essentially requesting money from the mortgagee to finance your home purchase. The mortgagee will evaluate your financial history, creditworthiness, and other factors to determine the terms and conditions of the loan.

2. Legal Interest Holder: Once you secure a mortgage loan, the mortgagee becomes the legal interest holder in the property you are purchasing. This means that the mortgagee has a claim on the property until the loan is fully repaid. If you fail to make your mortgage payments as agreed, the mortgagee has the right to foreclose on the property, sell it, and recoup their investment.

3. Escrow Account Management: In many cases, mortgagees may also handle the management of an escrow account. An escrow account is a separate account where a portion of your monthly mortgage payment is held to cover expenses such as property taxes, homeowners insurance, and private mortgage insurance. The mortgagee will use the funds in the escrow account to pay these expenses on your behalf.

4. Loan Servicing: Mortgagees are also responsible for loan servicing, which involves collecting your monthly mortgage payments, managing the account, and providing customer service. This means that you will interact with the mortgagee regularly throughout the life of your loan for any questions, concerns, or changes to your mortgage terms.

5. Refinancing and Renewals: As your mortgagee, they may also offer refinancing options or loan renewals when your initial loan term is about to expire. Refinancing allows you to restructure your mortgage terms, such as interest rate and repayment period, to potentially save money or take advantage of changing market conditions.


A mortgagee plays a crucial role in the homebuying process by providing the funds you need to purchase a property. They also hold a legal interest in the property until the loan is fully repaid. Understanding the role of a mortgagee can help you navigate the homebuying journey confidently and make informed decisions. Whether you’re a first-time homebuyer or looking to refinance, working with a reputable mortgagee is essential to ensure a smooth and successful home financing experience.