Real estate transactions do not only consist of mortgages. Some people buy a property using a deed of trust. Oregon is one state that allows this kind of transaction. While similar to a mortgage, a deed of trust involves three different parties.
Before you enter into a deed of trust, you should know who you will deal with, as a deed of trust may involve people that ordinarily would not be party to a mortgage.
One reason to use a deed of trust is to secure a home loan from a party that is not a traditional bank or lender. You could contract with another kind of business or a single individual to finance the loan for your property. Over time, you will pay the party, known as the beneficiary, until you have fully paid off the loan.
Once you have signed a deed of trust, the property goes into a trust. A trustee possesses the legal title of the property until you have paid off the loan. A trustee is typically a title company, though other parties may take up the position. The trustee must end the trust and give you the title once you have completed your loan payments.
As the person with property held in a trust, you are the trustor. Even without the legal title, you retain equitable ownership of the property provided that you continue to fulfill the payment terms of the loan. As a benefit, you can live on the property and acquire equity as time passes.
A deed of trust should give you a full description of your obligations. Review any agreement carefully to spot potential areas of concern.