The Foundation

There are two instruments when you buy a house – a mortgage and a note.

A note is a promise to pay. In non-judicial states, these are a deed of trust that you sign. When paid on time, the lender will give you the house. If you don’t pay, the bank can foreclose or sue on the note.

A mortgage is the collateral. This is a pledge that you give to the bank, and they then have the right to enforce the lien if you become delinquent.

Many people don’t know that they’re signing two different instruments.

When you buy the asset from the bank, you’re buying that signed paper. The underlying collateral is the property attached to that paper by the trustee.

nngcapitalfund.com

#thefoundation #mortgage #collateral