Loan, Mortgage, and Deed: What’s the Difference?

Many investors ask what’s the difference between a loan, mortgage, and a deed. There are a lot of moving parts that you need to take into consideration. Don’t run the risk of missing deals and missing transactions! Here at The Cash Flow Company we want to guide you through the process to ensure that you have what you need to be successful. Remember, leverage is king in real estate, you need money to make money! Where do you start? Let’s take a closer look.

1. Loan Agreement

A loan agreement is simply someone borrowing money from another person and the agreement between them. Some examples are a promissory note and credit cards. To clarify, credit cards are an unsecured loan because there is no collateral. Unsecured loans are often available at higher rates than secured loans. Whether it is secured or unsecured, a loan agreement states how the money will be paid back, as well as the terms. 

2. Mortgage or Deed?

People have either a mortgage or a deed, depending on the state. This secures the loan, by putting a lien on a property, and in turn gives the lender rights to the property. The documentation then goes on record with the county and shows that the property has a lien on it. To put it another way, the mortgage or deed provides the collateral for the loan.  

Mortgage:In states where a mortgage is used, a judicial process is used if something happens and the property forecloses.  

Deed:A deed of trust is an instrument that was established long ago and is controlled by a trustee. This trustee is a third party who holds the instrument and in turn protects both parties. 

We are here to help!

Here at The Cash Flow Company we want to make sure that you have everything you need to be successful. By further understanding the lending process, you will save both time and money!  It is important that you feel comfortable with this process so you can do more deals, and make more money! Contact us today to find more about Loan, Mortgage, and Deed: What’s the Difference?

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