We’ve been working on our series, During Your Settlement, and talking about the process and documents you may be signing at closing. We’re doing this to make it a little clearer so you understand, in advance, some of those things might see at the closing table.
Today we’re talking about the Deed of Trust. So, we’ve talked about the Closing Disclosure, The Note, and now we’re talking about the Deed of Trust or or the Mortgage. The Deed of Trust is the document the lender requires you sign, which is recorded in the land records with your deed. So why is it recorded? Well, it puts the public on notice that you have a loan secured by your property and what some of the basic requirements are.
This Deed of Trust puts your property in trust with a trustee designated by the lender. The Trustee is a person that the lender appoints to handle the foreclosure process, usually an employee or an attorney they work with. If you’re not making your mortgage payments or if you’re in violation of any other terms of the loan the lender can start the foreclosure process. In the foreclosure process the lender can take your home to try to recuperate their loan balance. So when you go to closing your sign the Deed of Trust which puts your property in trust with the lender for as long as you own that mortgage. This ensures they are repaid all of the money they are owed plus interest.
The Deed of Trust is probably about ten to twelve pages long and it’s pretty boilerplate information. Basically it gives the lender the right to do inspections, to make sure that the property still in good condition throughout the term of the loan and is designed to make sure that you’re making the payments. It lists the requirements and the timing for repayment of the loan, the amount of the loan, what the payment schedule is, it describes the property loan is secured against, and then the generic terms of the loan.
There may be some attachments to that Deed of Trust that are called riders. The rider is an attachment document that makes that Deed of Trust specific to your property. So if your property is in a neighborhood that has homeowners association dues you may have a PUD rider which is a Planned Unit Development rider attached to it that makes your Deed of Trust specific to your property because your property is located in what’s called a PUD or Planned Unit Development and may have homeowners association dues that have to be paid. This matters because if you don’t pay your HOA dues they could cause the lender a problem with the security of their loan against your property and you will then be in violation of one of the requirements in your loan.
Another type of rider could be an ARM rider which would be necessary if you have an adjustable rate mortgage. So if you have an adjustable rate mortgage that’s a little bit different than a traditional a straight rate mortgage and so that may be an attached rider. So some riders are just attachments to your Deed of Trust that makes the Deed of Trust very specific to your loan or your property.
We have a lot more information here on our website that we’d love to share with you and we have a package of sample documents we’d be happy to send you in advance of closing to review. That way you can go through some of these documents which will help make the process at closing a lot less intimidating for you. Please ask one of our team members to sent you our Sample Documents Book for review or download it from our website www.footetitlegroup.com.
At Foote Title Group we are committed to making sure you understand everything that’s happening through every step of your closing. We know how overwhelming and intimidating the closing process can be. Purchasing a home or piece of property to build a home is more than likely the single most expensive thing you will probably ever do in your life and whether it’s the first time or the hundredth time it can be a lot to digest. That’s why we make sure that you know everything that’s going on while we pull all of the pieces together for you. That way when you are ready to sit down at the settlement table you feel comfortable knowing what to expect and when you get those keys you can walk into your dream home knowing, with Foote Title Group behind you, you and your home are protected.