Is Florida a Deed of Trust or Mortgage State?

March 10, 2024

If you've been involved in a real estate transaction, you probably have an idea of what a mortgage is. Potential buyers need to secure a mortgage or a deed of trust to complete the purchase, so it's not a step that can be left out of the process. In some parts of the country, people can choose between either of these two options to secure the necessary funds, but that doesn't mean they're interchangeable. In fact, the option of a deed of trust is simply off the table in many states.

That's why it's important to get in touch with a local title and escrow service to help you with your transaction. On top of having up-to-date information about the market, pricing, and local demand, your agent can save you time narrowing down your options, since the state and county will shape more than one part of the process.

The topic of this blog post is just an example of that. Your loan options may differ depending on the state where the transaction takes place, but it doesn't hurt to understand the distinction between a mortgage and a deed of trust.

What Is a Deed of Trust?

When a person takes a deed of trust, they borrow a specific amount of money to fund the purchase of a home. In these cases, the document (deed) creates a lien in which the property serves as collateral for the loan, so it shouldn't be mistaken for other types of deeds we've covered in the past (check out our blog "Is Florida a Deed or Title State?" to learn more about the other types of deeds and how they serve to validate a person's ownership of a property).

A trustee is tasked with holding the property title during the repayment period, so there's a neutral third party following the process until the loan is repaid. If the borrower fails to complete the payment, the trustee has full control of the property and can even sell it without official court permission.

This system comes in handy for a number of situations, like loan agreements involving small lenders or pending debt.

As stated in an article from Rocket Lawyer, deeds of trust are not recognized in Florida and other states inside the U.S. So, if you plan on buying a real estate property in the area, a mortgage is the way to go.

What Is a Mortgage?

Most adults understand the basics of a mortgage deed, but it's still important to revisit the concept when talking about the purchase of a home in Florida. Mortgages are similar to deeds of trust on the surface: both options entail taking a loan for a home purchase, with the property itself being used as collateral.

The main difference comes from the absence of a trustee, with the mortgage agreement outlining several clauses meant to protect the interests of both parties. The lender and the borrower are the only two parties involved in the procedures from beginning to end. Because of this, if it comes to selling the house, lenders still have to follow a court process before moving forward.

The mortgage deed lists all relevant data about the property, the borrower, and the lender. It also states the loan amount and additional fees, preferred mode of payment, payment schedule, and a summary of the lender's rights on the property when borrowers fail to fulfill their contractual obligations.

Mortgage Loans in Florida

With one of the largest and most varied populations in the U.S., Florida has a thriving real estate industry. Chances are that you find something that's tailored to your needs once you get deep into house-hunting mode, but that's just the beginning.

First, the price range changes depending on the county and the demand at the time of the closing. Then, you need to define your mortgage plan since you can't set your sights on a specific property without knowing how much you'll be expected to pay each month.

Your mortgage combines many costs attached to the property, including homeowner's insurance policies, property taxes, and interests. You can get an estimated amount by using an online calculator but a real estate agent can help you a lot on this end. With their assistance, you'll get an accurate projection of the costs and ensure that other options aren't overlooked in the rush to secure an offer on time.

Secure the best support network for your real estate transaction. The specialists at Key Title & Escrow can give you the counsel you need so you don't have second thoughts when finalizing your mortgage closing.

Key Title & Escrow is here to assist you with the best services to ensure a quick settlement with no loose ends. If you're planning to buy a property in the near future, we invite you to contact our specialists to get on top of things from the get-go. Just call (305) 235-4571 or toll-free at (800) 547-0006 to learn more about our services. And remember that you can also reach out to us via the contact form on this page. Key Title & Escrow helps you ensure a successful closing and a stress-free experience!