There is often some confusion over the difference between a mortgage and a deed of trust. They are both involved in the purchase of a home. A mortgage is the loan that you take out for the home that you are going to purchase. Protected Trust Deeds is similar because it is also a pledge for the real property that you want to own that allows you to secure the loan. It involves three different parties including the trustee, trustor, and the beneficiary. The trustee is the independent third-party that will have legal title to the property until it is paid off. The trustor is the person purchasing the property, otherwise called the buyer. Finally, the beneficiary is the person that is lending the money to the person making the purchase.
Overview Of The Deed Of Trust
When you purchase real estate, a trust deed, also known as a deed of trust, is the deed or legal title to a property that will be transferred to the trustee. It is the collateral or security that is used when a loan is provided for a person that is buying a property. It is paperwork that is representative of this relationship between you and the bank or lender, a promise to pay of sorts. It is used not only when purchasing a property but when you are doing transfers from one owner to another.
Deed Of Trust Transfers
Like all of the documentation that is necessary when you are purchasing a home, a deed of trust is registered officially in county records. When a home is sold, the deed of trust must transfer which means it must be refiled under a different name. These are called assignments whether you are dealing with mortgages or deeds of trust, and are often part of the foreclosure process as well. They allow people to proceed with the purchase of any property regardless of the circumstances.
This basic overview of what a deed of trust is should allow you to understand how the process of purchasing a home actually works. Unless you have the cash to pay for the home outright, you are going to need one to pursue your goal of ownership. Although you will be the owner of the property on paper, the deed of trust is representative of the loan that you owe to the bank that is your lender and will be held by them until you can pay the home off.