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.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
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Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO
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22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
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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.
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