You'll sign many documents at your mortgage closing. One of the most important is the mortgage deed, also known as the deed of trust. This legal document gives your mortgage lender the right to foreclose on your home if you fail to make your mortgage payments on time.
When you sign the mortgage deed of trust at your closing, you are giving your mortgage lender a lien, or interest, in your mortgaged home. This provides legal protection to your lender in case you stop making your mortgage payments. Once you sign this paper, the lender gains the right to foreclose on your property if you default on your loan.
The mortgage deed will spell out how far behind you must fall in your monthly mortgage payments before your lender will start the foreclosure process. This can vary, but often lenders will reserve the right to start foreclosing on your property if you fall behind more than 60 days on your mortgage payments.
Officially, the mortgage deed transfers the title of your home to the lender. The lender, though, can do little with this title. In fact, the deed stipulates that all the lender can do is start foreclosure proceedings if you fail to adhere to your mortgage payment schedule. For example, the lender is not able to sell your home out from under you if you are making your payments on time.
The mortgage deed might seem like a frightening document, but if you make your mortgage payments on time the document will cause you no financial distress. Besides, you won't be able to receive your mortgage dollars without first signing this document. Your lender won't process your loan until it receives this signed document.
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