When someone buys a home, in most cases, that buyer will need to borrow the money from a lender to help finance the purchase. The terms of the loan are written into a simple document called a “note.” The note specifies how much the home buyer borrowed from the lender, the interest rate, the term of the loan and the monthly payment. The note itself is only the promise to pay the money that has been borrowed. With only a note, the lender has no collateral for the borrowed money. Therefore, if the borrower fails to pay his monthly payment as outlined in the note, the lender has no recourse.

The “Mortgage”, or deed of trust not only outlines the terms contained in the note, but also gives the lender legal recourse to take possession of the property if the borrower fails to comply with its terms. The mortgage is the lender’s security that the note will be repaid.