304 North Cardinal St.
Dorchester Center, MA 02124
304 North Cardinal St.
Dorchester Center, MA 02124
The question of homeownership is not always straightforward. That is why many people under the mortgage agreement wonder whether they have a deed if they have a mortgage. Let’s break it down.
Do you have a deed if you have a mortgage? No, you don’t have a deed if you have a mortgage. When you get a mortgage loan and buy a home, the financial institution keeps the deed. Lenders have an interest in the ownership of a home until the loan is fully paid.
A deed is a legal document that transfers the title of property from one person to another. If you have a mortgage, then you technically do not own the property – the bank does.
However, the intertwining of deeds and mortgages doesn’t end with this simple explanation. Before signing the agreement with a financial institution, check the following text and solve all of your dilemmas.
With mortgage loans, your home becomes collateral – an asset a bank or other lending institution accepts to secure a loan. Collaterals can be different types of assets, which means that you can mortgage your car, as well.
The lender holds an interest in your realty until you repay a loan fully. If you don’t meet the terms and stop making payments, lenders have a legal right to foreclose your home.
For how long will your realty be under mortgage? Although most home mortgages have a thirty-year term, you can pay your mortgage off in five years with a good financial plan. No matter how long it takes, as long as you meet your monthly payments and don’t violate the terms, the lending institution will not take any actions against you.
As an official document signed by both lender and borrower, a mortgage deed is one of many different real estate deeds. It states the terms of the agreement and allows a bank or other lending institution to hold a lien to the house until the debt has been paid off in full.
With their signatures, borrowers agree on foreclosure if the agreed terms are broken. Payments the borrower couldn’t meet will be compensated by selling the house stated as collateral. Lien against a borrower’s assets is the reason a mortgage is considered an encumbrance.
Depending on the state law, you may be presented with a mortgage deed or a deed of trust. In some states, both of these documents are legal, while in others, only one of them is legally acknowledged.
Both of these documents have the same purpose – to protect a financial institution in case borrowers can’t meet their obligations. However, there are some important differences between them. Take a look at the table below:
|Mortgage deed||Deed of trust|
|Involved sides||A borrower and a lender||A trustor, a beneficiary, and a trustee|
|Process of foreclosure||Judicial||Nonjudicial|
|Foreclosure length||Time-consuming||Demands less time|
In the case of a deed of trust, the beneficiary is the lending institution, the trustor is the borrower, and the trustee is a third-party entity. In this type of contract, the trustee usually holds a title to the realty until the loan is paid off.
There are different ways you can determine which type of papers you signed:
These two are sometimes used as synonyms, but their meaning is not entirely identical. A deed, as we said, is an official document that states who has ownership. On the other hand, a title implies who has the right to the property. While deeds, as documents, physically exist, the title is the notion of ownership.
Lending institutions are usually the ones that hold title deeds. Only after the loan has been fully paid off, the mortgage discharge is recorded in the county registry, and your property’s ownership is cleared. That’s when you finally become the sole owner of the property.
Remember – even though up until that moment you lived on that property, the ownership was never indeed yours.
If a person that holds a mortgage passes and has no inheritors, the lending institution usually sells the realty to balance the money lost. If the deceased had inheritors, they will inherit the loan, too, or sell the real estate to repay the lender.
If two people decide to buy real estate with the help of a lending institution, it’s called a joint mortgage. It is an excellent solution if a couple, for example, can’t get a lending agreement separately. In that case, they both share all payment responsibilities as well as ownership.
You would need every co-owner’s full legal consent to take a mortgage on the whole realty. If you don’t have it, selling interest is always possible – but only your own.
When do you get a deed if you have a mortgage? When you buy real estate, it needs to be registered with the county, and so does the mortgage against your title. After it, deeds are usually sent to the lender, who holds them until you fulfill the last payment. After the debt is paid off entirely, the documents will be sent back to you, and the financial institutions will no longer have an interest in your realty.
If your obligations stated in a deed are met regularly, don’t fear the fact that lenders have an interest in the ownership of your home. As long as you respect your side of the agreement, so will your lender. Naturally, after your debt towards the lending institution is settled in full, the title to the house will become yours entirely.