What is the primary difference between a mortgage and a deed of trust?
Why A mortgage uses two parties; a deed of trust uses three parties (borrower, lender, trustee) Is Correct
Answer A: A mortgage uses two parties; a deed of trust uses three parties (borrower, lender, trustee)
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
Key Finance Terms in This Question
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Deed of TrustA 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).
People Also Study
Related California Questions
- In California, a deed of trust differs from a mortgage primarily because it:Finance
- In California, a lender who forecloses on a purchase money deed of trust on a 1-4 unit residential property occupied by the borrower is generally:Finance
- In California, a deed of trust involves three parties. Who are they?Escrow & Title
- A deed of trust in California has three parties. Which of the following correctly identifies all three?Finance
- A deed of trust in California involves three parties. Who are they?Finance
- A borrower's monthly gross income is $8,500. The lender uses a 43% maximum DTI. The borrower has $850 in existing monthly debt payments. What is the maximum allowable monthly mortgage payment?Real Estate Math
- What document does a trustee under a deed of trust record to start a non-judicial foreclosure in California?Escrow & Title
- What is a 'deed of trust' and how does it differ from a mortgage in terms of the parties involved?Escrow & Title
Key Terms to Know
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).
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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.
Math Concepts
Study This Topic
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →