In Virginia, what is the primary security instrument used to secure a real estate loan?
Correct Answer
B) A deed of trust naming a neutral third-party trustee
Virginia exclusively uses a deed of trust as the primary security instrument for real estate loans. A deed of trust involves three parties: the trustor (borrower), the trustee (a neutral third party who holds legal title), and the beneficiary (lender). This structure enables non-judicial foreclosure under a power of sale clause without court involvement.
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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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