A real estate student in Indiana is studying for the state licensing exam. She reads that Indiana uses mortgages rather than deeds of trust. Which of the following correctly identifies the number of parties involved in an Indiana mortgage transaction?
Correct Answer
A) Two parties: the borrower (mortgagor) and the lender (mortgagee)
An Indiana mortgage is a two-party instrument. The two parties are the borrower, called the mortgagor, and the lender, called the mortgagee. The mortgagor pledges the property as security for the loan by signing the mortgage. This two-party structure is a defining characteristic of mortgages and distinguishes them from deeds of trust, which involve three parties.
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Related Topics & Key Terms
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Related Concepts
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
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