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Deed of Trust

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Deed of Trust

In the US, the deed of trust or mortgage (depending on the state in which the mortgage loan takes place) is the instrument that makes the property security for the loan given to the borrower. 

The promissory note is the agreement document in which the borrower undertakes a contractual obligation to repay the principal of the loan and interest calculated at the specific interest rate stipulated in the note.

The mortgagee, in the case of a mortgage loan, is actually the party that takes a mortgage or deed of trust as a security of a loan, that is, the lender.

The mortgagor is the party that gives a mortgage or deed of trust as security for a loan, that is, the borrower.

Mortgage loans are typically necessary for carrying a property transaction, due to the large capital requirements for financing the full purchase price of a property. Furthermore, when there is positive leverage, it is to the investor’s advantage to use a mortgage loan to finance a property acquisition, because it enhances the investor’s return on equity.

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