Who Owns My Home If I Have A Mortgage?
Many borrowers believe that when they purchases a property by obtaining mortgage financing, they also own their home. Technically speaking, full ownership on a property only happens once the mortgage loan amount has been paid in full.
To break this down in more detail, there are a few components of a mortgage:
A Promissory Note is a document signed by the borrower acknowledging their commitment to pay the mortgage back with interest in a specific period of time.
In addition to the terms of repayment, the Note also contains provisions concerning the rights of both parties involved in the agreement.
In some states, a Deed of Trust is used instead of a Mortgage Note.
The main difference is that on a Deed of Trust there is a Trustee, which the legal title is vested to in order to secure the repayment of the loan.
There are three parties involved with a Deed of Trust:
- Trustor – This is the borrower.
- Trustee – This is the entity that holds “bare or legal” title, and is usually the title company which holds the Power of Sale in the event of default and re-conveys the property once the Deed of Trust is paid in full.
- Beneficiary – This is the lender that is getting repaid
Deeds of Trust are easier for lenders to foreclose on than a mortgage because there is no need for a judicial proceeding. Mortgages on the other hand, have to go through judicial proceedings, which can be expensive and time consuming.
Time frame for foreclosures of a deed of trust is about 3 months after the notice of default compared to a year for mortgages. Basically, until you have your promissory note paid in full, you are not the only one with an ownership interest in your property.
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Related Articles – Mortgage Payments:
- Mortgage Payment Basics
- Who Owns My Home If I Have A Mortgage?
- Why Do I Need Mortgage Insurance?
- Understanding An Amortization Schedule
- Shopping For A Hazard Insurance Policy
- Understanding the FHA Mortgage Insurance Premium (MIP)
- Do I Have To Continue Making My Mortgage Payment If My Lender Goes Bankrupt?