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:

  1. Trustor – This is the borrower.
  2. 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.
  3. 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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