Glossary
Deed of trust
A three-party document (borrower, lender, trustee) some states use instead of a mortgage to secure a home loan against the property.
In deed-of-trust states, the property title is technically held by a neutral third party (the trustee) until the loan is repaid, rather than the lender holding a direct lien as in mortgage states. The practical effect is mostly in foreclosure: deed-of-trust states typically allow faster, non-judicial foreclosure without going through court, while mortgage states usually require a judicial process. Which document your state uses is set by law, not by choice, so you cannot select one over the other.
Related terms
- Origination fee An upfront charge (0–8% of the loan) deducted before funds reach you. A $10,000 loan with a 5% fee delivers $9,500 — but you repay all $10,000.
- APR Annual percentage rate — the interest rate plus mandatory fees, expressed as one yearly cost. The only honest way to compare two loan offers.
- FICO score The most widely used credit-scoring model among lenders, built by Fair Isaac Corporation — often used interchangeably with "credit score," though VantageScore is a common alternative.
- Credit utilization ratio The share of your available revolving credit you are currently using — the second-biggest factor in your credit score, after payment history.
- Unsecured A loan that requires no collateral — approval rests on your credit profile and income.
- Amortization The schedule that splits each payment between interest and principal. Early payments are mostly interest; the balance flips near the end of the term.