Mortgage & Loan Documents in North Carolina

In North Carolina, the way a home is financed is captured in the public record through a specific legal framework. Unlike many states that use a mortgage document, the state primarily utilizes a deed of trust. Deed of trust records offer transparency, allowing buyers, sellers, and homeowners to research a property’s financial history and understand any existing obligations tied to its title.

What Is a Mortgage?

Although commonly called a mortgage, the legal instrument used in North Carolina is a deed of trust. It is an agreement where the homeowner (the grantor) grants a security interest in the property to a third party (the trustee) for the lender (beneficiary). If the loan is not paid, the trustee has the “power of sale” to foreclose on the property.

What Is a Home Loan?

A home loan is the money borrowed to refinance or purchase a house. While all mortgages involve a home loan, not all home loans involve a mortgage. The home loan sets the repayment terms, interest rate, and maturity date. However, the loan itself is not recorded.

Mortgage vs. Home Loan: What’s the Difference?

While many people use the term “mortgage” to refer to both the deed of trust and the home loan, North Carolina separates these two concepts. The following differences exist between the two:

• The Home Loan: The home loan is a private contract, often called a promissory note. It functions like a personal “I.O.U.” to the bank and contains sensitive details such as interest rate, your monthly payment amount, and any penalties for paying the loan off early. Since it is a private contract, it is not recorded at the courthouse.

• The Deed of Trust (The Collateral): This is the public document that “attaches” the loan to a specific piece of North Carolina land. By signing it, the beneficiary is giving a third party, the trustee, the legal right to sell the home if they stop making payments. This deed of trust is recorded at the Register of Deeds as a notice that the bank has a claim on the property.

Why They Matter for Buyers and Homeowners

Public mortgage records are important for due diligence. They provide buyers, homeowners, and title professionals with insight into a property’s financial status, as they show the following information:

• Whether a property is still encumbered by a loan

• Who the lender is and whether servicing has changed

• The loan’s original balance (not the current payoff amount)

• If the loan was refinanced or released

• Whether the lien was assigned to another company

Common Types of Home Loans in North Carolina

The following are common types of loans in North Carolina:

• Conventional Loans: These are the most common type of loan in North Carolina and nationwide. They are private-sector loans that are not backed by the government but follow guidelines set by Fannie Mae and Freddie Mac regarding loan limits, credit scores, and down payments.

• FHA Loans: These loans are insured by the Federal Housing Administration and are typically a suitable option for buyers with smaller down payments or lower-to-moderate incomes.

• VA Loans: These loans are guaranteed by the U.S. Department of Veterans Affairs and are available to eligible service members, veterans, and surviving spouses. They often offer competitive interest rates and typically require no down payment.

• USDA Loans: Backed by the U.S. Department of Agriculture, these loans are designed for buyers in designated rural and suburban areas. They aim to promote homeownership in these communities and often offer 100% financing.

• Jumbo Loans: These are conventional mortgages that exceed the conforming loan limits set by federal guidelines. They are more common in higher-cost areas.

• Home Equity Loans/Lines of Credit (HELOCs): Homeowners can borrow against the equity they have built up in their homes using HELOCs. They are often used for renovations, repairs, or debt consolidation.

• Reverse Mortgages: These are designed for homeowners aged 62 or older who have significant home equity. Instead of making payments, the lender pays the homeowner, and the loan is repaid when the homeowner moves out or passes away.

What Mortgage Documents Become Public Record?

The home loan or promissory note containing the interest rate and payment schedule is not part of public records in North Carolina. However, deed of trust documents commonly found in county land records in the state include the following:

• Deed of Trust: The main loan security document

• Assignment of Deed of Trust: Shows if a loan is transferred to a different lender or servicer

• Substitution of Trustee: Names a new trustee if needed

• Satisfaction or Release of Deed of Trust: Confirms a loan has been paid off

• Notice of Hearing or Foreclosure Filing: Filed when foreclosure is to be triggered

What Information Appears in Mortgage Records in North Carolina?

Typical recorded deed of trust records include the following:

• Names of borrowers and lender

• Trustee’s name

• Property address and legal description

• Original loan amount

• Recording date and document number

• Lien priority

• If MERS (Mortgage Electronic Registration Systems) is involved, it may appear as a nominee for the lender.

Note that MERS is used by some lenders in North Carolina as a way to simplify assignment tracking. Since the state does not prohibit the use of MERS, its name often appears in recorded deeds of trust in the “beneficiary” field or as the “nominee for the lender and its successors and assigns” on the originally recorded deed of trust.

How Mortgage Records Affect a Property in North Carolina

Mortgage or deed of trust records in North Carolina establish lien priority, which determines the order lenders get paid from sale proceeds. The first loan recorded is the “first mortgage.” If a homeowner takes out a second loan, such as a home equity loan, and it is recorded later, it becomes a “junior lien.” If a foreclosure happens, the first-priority lender is always paid before the junior lenders.

Note that these records also reveal pending loans that must be cleared for a sale, confirm if previous loans were properly released, and show existing second mortgages or HELOCs that impact a seller’s equity.

How to Find Mortgage & Loan Documents in North Carolina

In North Carolina, all recorded mortgage documents are maintained by the county Register of Deeds where the property is located. Most counties offer online search portals for their public land records.

Certified copies can also be requested in person at the register’s office for a small fee. To find the record you need, you will need to provide relevant information such as book and page number, document number, address, or names of parties involved.

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