Posts Tagged ‘home purchase’

Mortgage or a Note to a Deed of Trust?

June 16, 2014

Often people commonly use the word Mortgage when they take a home loan.  A true Mortgage however is much different from a ‘Note to a Deed of Trust’ which make up the majority of all home sales.

Mortgages typically deal with homes with 40+ more acres and were designed for Farm, Ranches and large Estates.  That will be another article….. today we will touch on a ‘Note to a Deed of Trust’ .  What is it?  How typical is it?  Why do banks use them’?

For real estate purchases, state law requires either a mortgage or a deed of trust to provide security for a home loan. In many ways, a deed of trust functions like a mortgage. However, one major difference between the two lies in who holds the legal title for the home while the loan is being paid. In a deed of trust, the legal title is held by the trustee, often an escrow company, while the equitable title is held by the borrower. Also, in a deed of trust, a foreclosure can be conducted outside of the courts, which is almost always faster and less costly than a judicial foreclosure.

A deed of trust secures repayment of the loan by placing a lien on the property. There are three parties to a deed of trust: the borrower, the lender, and a trustee. Some states permit both a deed of trust and mortgage, while others use just one or the other. A deed of trust is always used together with a promissory note, which is a contract that sets and controls the terms of the loan and repayment. The trust deed is simply a security instrument—without it, the note still creates indebtedness, but it is an unsecured debt. The money would still be owed, but a lender would not be able to force a sale in satisfaction of the note without going to court as an unsecured creditor.

When a note is secured by a deed of trust, it allows the loan holder to take back the property if the conditions for repayment aren’t met. Remember that with a deed of trust, this can be done without court proceedings.   The deed of trust, not the note, is recorded with the county recorder in the county where the property is located and indexed in the public records.

 

For more information on deeds and to purchase real estate deeds for your county and state, visit

deeds.com.

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Closing a Real Estate Transaction – What to Expect

July 31, 2013

When you are purchasing a home, the closing is the last piece of the puzzle before you receive your keys to move into your new home. Your closing day may seem to move like a whirlwind, as there are many steps in the process that make sure everything is done professionally and accurately. What can you expect at closing? There are many things you need to know but here are a few of the basics.

First; the closing will generally be held at a Title Company, at an agreed location. However, depending on the circumstances, situation, and/or state you live in, it may also be conducted at your lender’s office, a real estate attorney’s office, or anywhere else that is legal and has been agreed upon.

There could be a number of different people who will attend the closing, such as your attorney, the seller and their attorney, both real estate professionals, your lender, the builder’s representative, the title company, a notary public and a closing escrow agent. It all depends on many different factors, such as; if it is a new construction home or existing, if there are attorneys involved, and the type of property that is being purchased. In many places the seller and buyer may sign at separate times. In some areas it may be customary for everyone to be at the same table at the same time.

Once the day and time has been scheduled for everyone at the agreed location, the closing process begins. Your closing escrow agent will review a settlement statement with you also known as the HUD (Housing and Urban Development) form, summarizing all the charges, credits and misc expenses that pertain to your particular purchase such as; title fees, loan fees, and other associated charges and credits that may apply based on the contracted details of your purchase.

When everything has been explained thoroughly and clearly so that everyone understands and is in agreement, then signing commences. The items you will have to sign may vary depending on the type of transaction. As an example; a cash deal will require a lot less forms to complete versus a standard ‘Conventional’ loan, but an ‘FHA’ (Federal Housing Authority) or ‘VA’ (Veterans Administration) loan will require a great deal more paperwork to review. Other documents you will also need to sign are the ‘Deed of Trust’ or mortgage, the promissory note, and the Clarity Commitment document. There might be other items to sign depending on your own specific situation and location.

Generally if you are financing your home then you will probably be required to provide evidence of homeowners insurance known as a ‘Binder; and in some cases the inspections that were performed on the home. Most all lenders require the buyer to have a homeowners insurance policy in place before they can sign over the home. This ensures that the lenders interests in the home are protected in case of a catastrophic event such as fire, water damage, etc.. This may also vary depending on your States requirements.

You will provide your down payment, closing costs, prepaid interest, taxes and insurance by using a certified or cashier’s check in most cases. Ask your closing agent what is the best form of payment that is acceptable. After all the parties involved have completed and signed all documents pertaining to the transaction, the lender (if applicable) will be notified to release funds to the closing escrow officer who will then distribute said monies as instructed by the agreement to the appropriate parties. The final step: Your new transaction will be recorded with the state, designating you as the rightful owner of your new home. In some states full funding may occur at the closing table, other states only after recording. Check with your agent for what is typical to expect in your State or area.

In order to cover everything, sign and delegate funds, the closing procedure may seem like a lengthy process. But once everything completed and all payments are distributed, the closing will be complete and you get the keys to move in to your new home.

About the Guest Author
Winter Park Colorado Real Estate Company, Coldwell Banker Mountain Properties is pleased to bring you this article on what to expect during a closing. Coldwell Mountain deals with Grand County Real Estate in Colorado. If you are interested in seeing their listings, check out their website today.