Property Ownership
In Kentucky, a 'trust deed' is NOT used because Kentucky uses mortgages instead. What is the functional difference?
AThere is no practical difference
BA mortgage involves two parties (borrower and lender), while a deed of trust involves three (borrower, lender, and trustee)✓ Correct
CMortgages are only for residential property
DTrust deeds are only for commercial property
Explanation
A mortgage is a two-party document between the borrower (mortgagor) and lender (mortgagee). A deed of trust, used in some states, involves a third-party trustee who holds title until the loan is repaid.
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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).
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.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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