Difference Between Mortgage and Deed of Trust

The mortgage is a loan to finance a purchase of property, with specified periods of payment and interest rates. The borrower (mortgagor) gives the lender (mortgagee) the right to take and hold or sell the property of a debtor as security or payment for a debt or duty on the property as collateral for the loan. Mortgages are of several kinds: as they concern the kind of property, mortgaged, they are mortgages of lands, tenements, and, hereditaments, or of goods and chattels; as they affect the title of the thing mortgaged, they are legal and equitable.

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. It is used in place of a mortgage. Also known as "Trust Deed". A trust deed is a legal document that used to create collateral for a mortgage. This gives the lender the ability to hold the collateral for security.

The difference between a mortgage and a deed is that, when a borrower signs a promissory note, he is agreeing to pay the lender a specific amount of money according to certain conditions. Another difference between a mortgage and a deed of trust is the manner in which foreclosure proceedings take place. The lender has the right to protect his interest, that's why lender wants a mortgage or similar security instrument in his favor by the borrower. There are three parties involved in the Deed of Trust, a trustee, the lender and borrower. The title is conveyed to a trustee by the borrower and the trustee is supposed to hold title of the property for the benefit of the lender. In other words we can say that, a mortgage involves a relationship between (1) the borrower/homeowner and (2) the lender, while a Deed of Trust involves three parties: the homeowner, the lender, and a title insurance company which is holding legal title to the real estate until the loan is fully repaid.

Missy Denton