Texas Hard Money Lender

Friday, May 15, 2020

Differences Between Mortgages and a Deed of Trust

A mortgage and a deed of trust are very similar. They are both loan agreements where a borrower uses the title to a piece of property as collateral for a loan.

In a loan transaction, the lender requires the borrower to sign either the mortgage or the deed of trust. Both of these documents set up the terms of the loan and a very similar. Both give the lender the right to sell the property through foreclosure in case the borrower defaults on the loan. However, there are two significant differences between the two: the involved parties and the foreclosure process.

Typically, mortgages and deeds of trusts have the same clauses. Both require the borrower has homeowner’s insurance, that the property is kept in good condition, and no hazardous substances are allowed on the property. Both mortgages and deeds of trust require the lender to give the borrower a breach letter and a specific amount of time to become current on the loan before beginning the foreclosure process.

Lenders in certain states such as California use deeds of trust to create security interests, while other states like Florida prefer mortgages. Depending upon the state the deed of trust may be called by another name. For example, Georgia calls the contract that gives the lender a security interest a “Security Deed.” However, it is the same thing as a deed of trust.

Mortgages and deeds of trust both use the borrower’s property as the source of repayment if the loan goes into default. However, they differ in two crucial ways. A mortgage has two parties: the lender and the borrower. A deed of trust, on the other hand, has three parties: the lender, the borrower, and the trustee. The trustee obtains the legal title to the property being used as collateral. This happens when the loan is originated and holds until the borrower pays the loan in full. Who the trustee is depends upon state laws. It may be an individual like an attorney or a business such as a bank. The lender typically chooses the trustee. The trustee becomes very important when the borrower goes into default and foreclosure proceedings begin. Trustees receive payment when they handle foreclosures and generally lookout for the lender’s interest during a foreclosure.

What Does Foreclosure Look Like?

If borrowers don’t make their payment, the lender will foreclose. The procedures of foreclosing a deed of trust or a mortgage depend entirely on the state laws and terms of the initial agreement. In states where lenders use mortgages, the lender files a lawsuit to begin the foreclosure process. This is called a judicial foreclosure. In states that use deeds of trust, the lender forecloses out of court using a process called nonjudicial foreclosure. Nonjudicial foreclosure can involve sending the borrowers a notice of default, recording the notice of default in the land records office, publishing information concerning the sale in newspapers, and giving the borrowers a notice of sale.

Deed of Trust or Mortgage? Which One is Best For You?

Deciding whether to use a mortgage or a deed of trust when buying your home depends on which state the property is located. For both a deed of trust and a mortgage the property serves as collateral in the case the borrower defaults.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
© 2019 Level 4 Funding LLC. All Rights Reserved.

Thursday, May 14, 2020

What is a Deed of Trust in ArizonaTrust

So, you have decided to buy a home in the great state of Arizona. Expect to sign your John Hancock to several documents. The is one you may not be too familiar with. In this article, you will learn all about what a deed of trust is used for.

Buying a home is one of the biggest decisions you will ever make. Information will be thrown at you right and left, and there are numerous documents you will need to sign. In many states, homeowners will use a mortgage for their property loan, but in other states, deeds of trust are more common. In Arizona, you will most likely use a deed of trust. Although mortgages and deeds of trust serve the same purpose, there are significant differences that all prospective buyers should be aware of before buying their home.

The deed of trust and mortgage are both executed and recorded in the county the property is located. They are both the same as in the property is used as collateral for the loan. Also, any future buyer will need to pay off the loan whether it is a deed of trust or a mortgage, and on a deed of trust, they will receive the deed of trust.

A mortgage operates in the same way in Arizona. One difference between the two documents is the parties involved. In a mortgage, there are only two parties: the borrower and the lender. The lender is typically a bank or private money lender. When a deed of trust is used there are three parties involved: the trustor, the trustee, and the lender. The trustee holds the title to the deed until the loan is paid off. Generally, the trustee is a business such as a title company or escrow company or individual such as an attorney. The trustee and the lender typically work together. In the case of a foreclosure, the trustee will be the party to begin foreclosure proceedings at the request of the lender.

The biggest difference between a mortgage and a deed of trust is foreclosure

What happens after a borrower defaults on a loan is called foreclosure and serves as the biggest difference between the two loans. Under Arizona law, a mortgage can only be foreclosed judicially which means in a court of law. That means a lawsuit would have to be filed and won to allow the lender to sell the property. This can be a lengthy and expensive process.

Deeds of trust, however, can be foreclosed with judicially or nonjudicially according to Arizona state law. Nonjudicial foreclosures only require recording a Notice of Trustee’s Sale which includes waiting at least 90 days and then legally selling the property.

What is a Deed of Trust?

Most of us are familiar with a mortgage. However, in many states, deeds of trust are used in place of mortgages and the role they play in the home buying process. But what is a deed of trust?

A deed of trust secures real estate transactions and includes three necessary parties: lender, borrower, and a trustee. The borrower receives money from the lender in exchange for a promissory note, and the trustee holds the legal property title until the loan is paid in full.

A deed of trust has many components that are similar to a mortgage and other components that work as a traditional property deed. Just like a traditional deed, a deed of trust has a detailed description of the property. This is called a property description. A property description describes what the trustor has rights to as long as they follow all terms and guidelines in the trust deed.

The agreed-upon purchase price of the home sans the down payment is the initial loan amount. The initial loan amount is what the lender is giving to the purchaser and is the exact amount that must be paid off at the end of the loan to dissolve the trust.

The trustee holds the legal title during the time the loan is being paid on. The role of the trustee is to be completely impartial when it comes to the deed of trust. As long as the loan proceeds the way it should the trustee has two possible options. If the trustor chooses to sell the property before the loan is paid off, the trustee pays the lender the proceeds of the sale that cover the remaining amount of money due on the loan. If the loan is paid off before the end of the loan, the trustee is responsible to dissolve the trust and give the trustor the legal title.

Do I have a Deed of Trust or a Mortgage?

The only major difference between a mortgage and a deed of trust that truly affect homeowners is when foreclosure is an issue. If you aren’t sure which was used to secure your loan be sure to review the documents you received at the time you closed escrow on your property. You can always contact your lender or call your local land records office. Although certain states use a deed of trust versus a mortgage, none use both. Deeds of trust are recorded in the same way mortgages are with the county clerk.

Mortgage Versus Deed of Trust

There are many similarities between these two loan assurances. In this article, we will break down some general information.

Why would you use a deed of trust? A deed of trust is used when traditional lending institutions are not being used. Certain states require homeowners to use a deed of trust instead of a mortgage. Regardless if you have a mortgage or a deed of trust their main purpose is to ensure the loan is paid in full. A mortgage involves only two parties, the lender and the borrower. A deed of trust includes a trustee who is responsible for holding the property’s title until the loan is repaid. In the case of default, the trustee will start the foreclosure process. In a mortgage, the lender is responsible for beginning foreclosure proceedings.

Be sure to take careful note of the terms outlined in the Closing Disclosure. These terms are where you will find particular differences between trusts and deeds and mortgages when it comes to foreclosure. In the event of the death of the trustor, a surviving spouse or family member can continue to keep making payments on the loan and take over as the trustor as long as they qualify.

With a traditional loan, lenders can impose certain restrictions and conditions in order for borrowers to qualify. Lenders may require the borrower to occupy the property as their primary residence for a specified period of time or pay mortgage insurance on the property. Be sure to discuss prepayment penalties with your lender.

There are little things borrowers need to be aware of when working with a deed of trust instead of a traditional mortgage. When it comes to foreclosures the process works differently. A deed of trust speeds up the foreclosure process because it is a nonjudicial foreclosure which means the courts don’t get involved. Acceleration and alienation are similar. An acceleration clause goes into effect once the borrower is behind on their payments. Depending on the terms of the acceleration clause it could happen after three months or even after just one missed payment. Depending upon the lender the borrower may have ample time to bring their payment current. An alienation clause is referred to as a due-on-sale clause. If the lender doesn’t want to have anyone who buys the property to assume the loan under current terms, they get an alienation clause in the deed of trust. These are a contractual language that ensures the borrower repays the loan when a sale or transfer occurs. Alienation clauses protect the lenders.

Deed of Trust or Mortgage? Which One is Best For You?

Wednesday, May 13, 2020

Understanding a Deed of Trust

Using a deed of trust to purchase real estate or borrow money using your property as collateral, you must have a legitimate trustee as part of the transaction.

What exactly is a deed of trust? A deed of trust is a legal document used in a real estate transaction when the borrower, or purchaser, borrows money for the purchase of property and uses that property as collateral. In most states, a mortgage is what is used to borrow money for the use of buying real estate. However, some states like California and Arizona do use deeds of trust. If you are not sure if your state uses mortgages, trusts of deeds, or both, contact any real estate broker in your area.

A deed of trust always involves three parties: the borrower, the lender, and the trustee. The borrower is called the trustor and the lender is the beneficiary. The trustee can be an individual or a business. Their role is to hold the title to the property until the trustor has paid the loan in full. Once the loan has been paid off, the lender notifies the trustee and the title is transferred to the trustor.

Sometimes deeds of trust are called mortgages. However, the documents are quite different. Unlike a deed of trust, a mortgage has only three parties: the borrower, also known as the mortgager, and the lender who is also known as the mortgagee. In the case of mortgages, the borrower holds the title to the property while the lender holds a lien on the property until the loan is repaid. Once the loan is repaid, the lender records a release of the mortgage and the lien is no more. Deeds of trust tend to be the favorite of lenders in the case of foreclosure. With a deed of trust, the foreclosure process is simpler. The foreclosure process, with a deed of trust, is nonjudicial, which means the courts are not involved.

Hearing, “deed of trust” can sound scary if you don’t know what it is.

A deed of trust is almost identical to a mortgage sans the differences mentioned in this article. A deed of trust is still a loan. The only big difference is the lender and the extra party involved.

A Look Into Trust Deed Investing

If you are looking to make some extra cash and have some fun, then start looking into Trust deed investing because it’s just about the easiest way to do what you want to do and make the cash you want to make.

And if you asked us, there’s no time like the present to start trust deed investing.

So you may have heard that trust deed investing is a little like a mortgage, and it is, but it has a few things that a mortgage does not. For example, a trust deed investment has three primaries in the trust deed investment transaction that a mortgage does not. They happen to be the borrower or the trustor, the lender or the beneficiary, and the trustee. The Trustee is the person who actually purchases the property and in the end, if the trustee is paid as promised, then they won’t have any claim to the property. Remember though that in a trust deed investment, if the borrower does in fact default then trustee takes back the mortgaged property.

We do offer one thing to look out for when you make a trust deed investment and that’s for you to look into properties you like when you make your Trust Deed Investments San Fransico : only look into property that you think you would like to own. There’s always a chance you could make a trust deed investment and end up owning the property, so make sure it is something that you actually like!

Also, consider getting yourself a secured debt or if you’d rather call them, non-performing notes for sale. These non-performing notes for sale could result in some big money for you when you buy them at a steep discount! Consider it as you look into Trust Deed Investments San Fransico . Good luck with your future endeavors!

Learning About Trust Deed Investments San Fransico

When you think about it, Trust deed investing is a fantastically simple way to get the extra cash and profits that you’re looking for and there’s never been a better time to really get your Trust Deed Investments San Fransico started.

If you’re on this page then there’s a good chance you already know quite a bit about trust deed investments, but we can go ahead and get you up to speed if you don’t. You could say that trust deed investments are a little like a mortgage, and that’s true, but they have some great differences as well. For example, a trust deed investment has three primaries in the trust deed investment transaction that a mortgage does not. They happen to be the borrower or the trustor, the lender or the beneficiary, and the trustee. The Trustee is the person who actually purchases the property and in the end, if the trustee is paid as promised, then they won’t have any claim to the property. Remember though that in a trust deed investment, if the borrower does in fact default then trustee takes back the mortgaged property.

As you get into trust deed investments then you have to really remember to stay focused and very deeply consider the properties that you want to invest in. We recommend that you do not try to invest in a property that you would not be interested in one day owning. We say that because there is always the chance that you could end up owning the property and it wouldn’t be fun to own something you don’t actually like. Just something to remember as you dive into the world of trust deed investing. Remember these tips and ideas we gave you and trust deed investing should be the best thing that you ever did for yourself. Good luck!