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A deed of trust is used in some states instead of a mortgage when a purchaser buys a property using borrowed funds. <\/p>
The trustee holds the title of the property for the lender till the loan is paid in full and transfers the title to the borrower once paid in full. If the loan is not paid, the trustee will foreclose on the property on the lender\u2019s behalf. <\/p>
Whereas, a mortgage is an agreement between a borrower and a lender that gives the lender the right to take the property if the borrower fails to repay the borrowed funds. <\/p>
As with the trust deed, once you take out a loan, you will sign a promissory note at closing also sometimes called a mortgage note, but the note will be secured with the mortgage deed rather than a deed of trust. <\/p>
The key difference is that a mortgage does not transfer a legal title to a trustee but rather places a lien on a property. <\/p>\n
In the case of a deed of trust, the borrower will typically face a non-judicial foreclosure on non-payment of the loan because the legal title is held by the trustee a lender does not necessarily need o go through the courts to foreclose on a property. <\/p>
However, in the case of a mortgage, the lender needs to go through court for foreclosure. Based on whether the lender and borrower agree to a trust deed or a mortgage, the cost and time taken for foreclosure are determined.<\/p>\n
The other difference is that the mortgage included only two parties the lender and the borrower, whereas, the deed of trust includes three parties, the Trustor, Trustee, and beneficiary.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t