Basic Terminology
Seller FinancingWhen a property seller acts as the lender, providing a loan to the buyer instead of the buyer obtaining traditional bank financing.Mortgage NoteA legal document that obligates a borrower to repay a loan at a specified interest rate during a specified time period.Promissory NoteThe written promise to repay the debt, containing all the terms of the loan.Trust Deed/Deed of TrustA legal instrument used in some states that transfers legal title in real property to a trustee, who holds it as security for a loan.Security InstrumentDocument that gives the lender rights to the property if the borrower defaults.MortgagorThe borrower in a mortgage transaction.MortgageeThe lender in a mortgage transaction.PayorThe person making payments on the note.PayeeThe person receiving payments on the note.Note HolderThe individual or entity that owns the note.Loan-to-Value (LTV)The ratio of the loan amount to the property's appraised value.