Finance
In Alabama, the document that creates a lien on real property as security for a mortgage loan is called a:
APromissory note
BDeed of trust or mortgage✓ Correct
CPurchase agreement
DTitle insurance policy
Explanation
A mortgage (or deed of trust in some states) is the security instrument that pledges real property as collateral for a loan. The promissory note is the borrower's personal promise to repay the debt.
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Key Terms to Know
Deed of Trust
A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Promissory NoteA written promise to repay a loan under specified terms — the borrower's personal financial obligation in a real estate transaction.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
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