Oct
26
Tebyus Kringle asked:
I have a friend who is buying a condo with a friend. Her name will be on the deed but not the mortage.
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I have a friend who is buying a condo with a friend. Her name will be on the deed but not the mortage.
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5 Responses to “What is the difference between a deed and a mortgage?”
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Kansieo.com
They are saying she will be ontitle but not the loan. Only one will be liable for the loan but they will both own it.
To comment on other comments, A mortgage is NOT a loan. You have a loan on your mortgage. You may have a deed attached to your mortgage.
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A deed is the right to property. If your name is on the deed then you have vested interest in the collateral (i.e- the property). If you are on the mortgage then you are responsible for repayment of the loan against the collateral. So if your friend is on the deed and not the mortgage, she will be an owner of the property but not responsible for repayment as far as credit is concerned (unless their is a lien placed against the property separate from the mortgage- like a tax lien, judgment, etc)
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A deed is a legal document showing ownership of property. A mortgage is a loan made on that property with the property being used as collateral. Default on the loan can result in the forfeiture of the property to the person or bank that made the loan.
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whoever is putting her on the deed is a moron if she is not also liable for payment
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A deed conveys ownership of the property. A mortgage pledges the owner’s interest in property as a security for a loan. Giving a mortgage is analogous to pledging the title on your car.
No bank or lender will accept a mortgage as security for the payment of the loan unless all of the owners of the property agree to sign the mortgage. The reason for this is that if the borrower defaults and doesn’t pay the loan, the bank will want to foreclose and take ownership of the property, but they can’t do that unless all of the owners sign the mortgage. So your friend is either mistaken or being misled. She needs to talk to a lawyer right away.
Now perhaps the plan is to deed the property to your friend AFTER the other person gets the loan and gives the mortgage. This would be very risky for your friend. The mortgage will prohibit this transaction, and if the bank forecloses your friend will lose everything because the mortgage will have been recorded before your friends deed. That fact means that the mortgage has priority over the deed. Really your friend needs to talk with a lawyer before doing any of this. It is very risky.
Incidentally in many states lenders use a document called a trust deed instead of a mortgage, but it works the same in most cases.