Finance
In Arkansas, which security instrument transfers bare legal title to a trustee to secure a loan?
AMortgage
BDeed of trust✓ Correct
CLand contract
DWarranty deed
Explanation
A deed of trust involves three parties: the borrower (trustor), the lender (beneficiary), and a neutral trustee who holds bare legal title. Arkansas allows both mortgages and deeds of trust.
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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.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
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