Do You Have a Mortgage or a Deed of Trust?

A mortgage is not a home loan. Most Americans refer to their home loans as mortgages. However, there is a significant difference between the two. It is a security instrument that you give to the lender, a document that protects the lender’s interests in your property. Here are a few facts about mortgages:

There are two parties in a mortgage transaction, the borrower, that is you and the lender that is the bank or mortgaging institution. Also, a mortgage document creates a lien on the property, which serves as a lender’s security for the debt. The lien is recorded in public records, probably at your county courthouse. You should keep in mind that ownership cannot be transferred to someone else until you pay the debt to release the lien. A mortgage gives the lender the right to sell the secured property to recover funds if you do not pay the debt. This process is called foreclosure.

Many of the states in America use mortgages as security instruments. The rest of the states use a deed of trust, which serves the same purpose but has a few key differences. A deed of trust is a special kind of deed that is recorded in public records, where it tells everyone that there is a lien on your property. A deed of trust involves three parties, where you are the trustor, the lender is the beneficiary, and a third party is the trustee. The trustee is someone who holds the title temporarily until the lien is paid. However, a trustee cannot claim your property for no reason and the deed of trust is cancelled once the debt is paid.