How Can Jim Stepanian Use Them To Help You?

Why Is Everyone Talking About First Trust Deeds?

It sounds like a piece of tricky legal jargon: “first trust deed”. But if you’re active in the investing world, odds are that you’ve been hearing that term for a while. If it sounds a little esoteric or confusing, don’t worry–most people are more familiar with the old-fashioned term “mortgage.” So, what exactly is a first trust deed, how is it different than a mortgage, and why would savvy financial professionals like Jim Stepanian talk so much about it? Let’s explore the questions one at a time.

What Is A First Trust Deed?

As you can see from our FAQ section on the website, this is a question that a lot of people have. Basically, a first trust deed is a mortgage that has been written so that the lender has the highest claim on a property in case of default. Let’s put that in more understandable language:

Say that you purchase a home by taking out a mortgage. There are two parts to the mortgage–the promissory note that you sign, promising to pay back the loan, and the trust deed. Your lender owns the first trust deed until you’ve paid back the loan. Even if you take out other loans that result in liens on our house–say you have a swimming pool installed and then do not pay for it–the lender that owns the first trust deed still gets paid first when the house is foreclosed on, or when you sell it.

How Can People Make Money With First Trust Deeds?

Making money with a first trust deed is easier to understand if you think for a moment about how banks make money on the loans that they extend to home buyers. Even if you’re investing in a “discounted” first trust deed, that doesn’t mean that your return on investment is “discounted”, only that you’re working with smaller amounts than the original value of the loan–a process that benefits the borrower as well as your bottom line.

Why Could This Be A Good Investment For Me?

Nobody can tell you how you should invest your money, and we encourage you to do your own research and consult trusted advisors before buying any investment. In this economy, first trust deeds often provide a good return on investment because the real estate market is changing so rapidly, leaving many borrowers in houses that are worth less than they had hoped. First trust deeds are considered a conservative investment, since they generally present a low risk to capital.

At Summerlin, we don’t want you to feel pressured or unsure about any of your investment strategies. If you’re interested in adding first trust deed investments to your portfolio but aren’t sure whether they’re right for your investing goals, we’d be glad to sit down with you and explore the pros and cons. There’s no reason to go into investing with your eyes closed.

Sources:

What Is A First Trust Deed? – http://www.zacks.com

Asset Management – http://www.wikipedia.org