Mortgage
A security instrument that pledges real property as collateral for a debt. In Texas, lenders use a deed of trust to play this role.
A mortgage is an instrument that pledges real property as security for a loan, creating a lien that lets the lender reach the property on default. The mortgage is paired with the promissory note: the note is the promise to pay, and the security instrument secures that promise.
Texas residential lending uses a deed of trust rather than a traditional mortgage. The deed of trust adds a trustee with a power of sale, which allows non-judicial foreclosure. The general term mortgage still appears on the national portion of the exam, so know how it relates to the note and the lien.
On the exam
Exam trap
Tested in
Financing & Settlement (6% of the exam)
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- Promissory Note
The borrower's written promise to repay a debt, which is the instrument that actually creates the obligation.
- Deed of Trust
The Texas security instrument that pledges real property for a loan and lets a trustee sell it non-judicially if the borrower defaults.
- PMI (Private Mortgage Insurance)
Insurance a conventional borrower pays when the loan-to-value ratio is above 80 percent, protecting the lender against default.
This definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.