Which security instrument does Minnesota primarily use to secure a real estate loan, and what does this mean for title ownership during the loan period?
Correct Answer
B) A mortgage; the borrower retains legal title while the lender holds a lien on the property
Minnesota is a mortgage-theory state. The borrower (mortgagor) executes a mortgage as the primary security instrument, which creates a lien on the property in favor of the lender (mortgagee). The borrower retains legal title throughout the loan period. This distinguishes Minnesota from deed-of-trust states where a third-party trustee holds legal title.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
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