Difference Between Mortgage and Deed of Trust

Whether you have a deed of trust or a mortgage, they both serve to assure that a loan is repaid, either to a lender or an individual person. A mortgage only involves two parties – the borrower and the lender. A deed of trust adds an additional party, a trustee, who holds the home's title until the loan is repaid.

1. What is the major difference between a mortgage and a deed of trust?
2. Is mortgage and deed the same thing?
3. What is the principal advantage of a trust deed over a mortgage?
4. Does a Trust Deed affect your mortgage?
5. Can you sell a house with a deed of trust?
6. What is the purpose of a deed of trust?
7. Does a deed mean you own the house?
8. Do you get a deed when you payoff your mortgage?
9. Who holds deed with mortgage?
10. Does a trustee own the property?
11. Who keeps the original deed of trust?
12. Does a deed of trust transfer ownership?

What is the major difference between a mortgage and a deed of trust?

The basic difference between the mortgage as a security instrument and a Deed of Trust is that in a Deed of Trust there are three parties involved, the borrower, the lender, and a trustee, whereas in a mortgage document there are only two parties involved, the borrower and the lender.

Is mortgage and deed the same thing?

Deed: This is the document that proves ownership of a property. It transfers ownership of the property to the grantee, also known as the buyer. ... Mortgage: This is the document that gives the lender a security interest in the property until the Note is paid in full.

What is the principal advantage of a trust deed over a mortgage?

A deed of trust has a crucial advantage over a mortgage from the lender's point of view. If the borrower defaults on the loan, the trustee has the power to foreclose on the property on behalf of the beneficiary.

Does a Trust Deed affect your mortgage?

A trust deed is a legally binding arrangement and covers unsecured debts only, such as credit cards and personal loans. It does not therefore apply to your mortgage or any hire purchase agreements.

Can you sell a house with a deed of trust?

If there's a deed of trust on a property, the lender can sell the property and pay off the loan. Whether your loan falls under the mortgage or deed of trust definition, you'll need to get approval from the lender before you sell your home for less than you owe.

What is the purpose of a deed of trust?

In financed real estate transactions, trust deeds transfer the legal title of a property to a third party—such as a bank, escrow company, or title company—to hold until the borrower repays their debt to the lender. Trust deeds are used in place of mortgages in several states.

Does a deed mean you own the house?

When you own a home, you own both the deed and title for that property. In real estate, title means you have ownership and a right to use the property. ... The deed is the physical legal document that transfers ownership. It shows who you bought your house from, and when you sell it, it shows who you sold it to.

Do you get a deed when you payoff your mortgage?

When you pay off your loan and you have a mortgage, the lender will send you — or the local recorder of deeds or office that handles the filing of real estate documents — a release of mortgage. ... On the other hand, when you have a trust deed or deed of trust, the lender files a release deed.

Who holds deed with mortgage?

While you have a mortgage, the lender has rights to the property title until the loan is paid. If you buy a home without a mortgage, the real estate attorney or title company records the deed and issues a copy to you.

Does a trustee own the property?

The trustee is the legal owner of the property in trust, as fiduciary for the beneficiary or beneficiaries who is/are the equitable owner(s) of the trust property. Trustees thus have a fiduciary duty to manage the trust to the benefit of the equitable owners.

Who keeps the original deed of trust?

As you stated in your question, it is recorded among the land records, and your lender keeps the original. When you pay off the loan, the lender will return the deed of trust with the promissory note. This document is rather lengthy and quite legalistic.

Does a deed of trust transfer ownership?

In the context of a California mortgage transaction, a trust deed also transfer ownership. Only this time, the title is being placed in the hands of a third-party trustee, who holds the property on behalf of the lender and the homeowner-borrower until the mortgage is paid.