What is a deed of trust?

A deed of trust is an essential legal document for home ownership in New Hampshire. It is a legal instrument used to create a trust relationship and provide security to the lender of a loan. The deed allows the lender to secure the loan against the property being purchased. It also grants a third party (the trustee) the authority to transfer the home to the lender if the borrower defaults on the loan. The deed of trust is not the same as a mortgage or a promissory note. The mortgage is the loan agreement between the lender and borrower, which outlines the payment agreement, interest rate, late fees, and so on. The promissory note is the borrower’s written promise to repay the loan. The deed of trust creates an encumbrance on the property. This encumbrance is secured by the lender and provides them with the assurance that they can receive repayment of the loan. In New Hampshire, to create a valid deed of trust, the document must be signed by both the borrower and the lender, witnessed and notarized. The deed must be also recorded in the county records office to officially give notice of the encumbrance on the property. Since the deed of trust provides a layer of protection for lenders, it is not uncommon for lenders to require a deed of trust when loaning money for the purchase of a home. It is also required if the borrower is refinancing a mortgage. The deed of trust allows the lender to recoup their financial investment in the event the borrower defaults on their loan.

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What is a deed of trust?

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