Mortgage Dictionary -> Borrower
The borrower. It's a term that has been around for centuries and continues to be a big term even today in the financial world. Unfortunately, despite how huge and covered this topic is, many people feel confused about what borrowing is, not to mention, what obligations go along with it. A little education goes a long way in the finance world, so you'll be learning all about what the borrower is here.
What is a Borrower?
The term borrower is rather self explanatory, but can have different meanings depending on what is involved. In the case of a loan - both in the form of a mortgage /other financing and credit -the borrower is the one who receives money from the lender. The borrower then is free to use this money as he/she wishes (usually to pay for something else), but must repay it in the time specified by the lender, or else the borrower risks defaulting on the loan.
What Obligations Does the Borrower Have?
For starters, the borrower is legally obligated to repay the debt in full. Further, the borrower must also pay any applicable finance/interest charges that were agreed upon when the loan/line of credit was first issued. If the borrower fails to make the minimum payments that the lender expects to see, or makes no payments at all and does not communicate with the lender, then the borrower can be legally taken to court over the money.
Why Borrowing Should Not Be Taken Lightly
Even though borrowing money is now thought to be a necessity, especially when it comes to financing large purchases like homes and cars, it's something that no one should take lightly. As a borrower, you must realize that you will need to pay back the loan just as soon as the lender wants it, or else you can be punished. You must also realize that just because you can borrow money, it doesn't mean you can live beyond your means and purchase something that you really can't afford to pay for over time.