What is the main difference between a mortgage and a land sale contract?

The primary distinction between a mortgage and a land sale contract lies in the transfer of ownership. In a mortgage, the borrower takes ownership of the property while the lender holds a lien on it as security for the loan. This means that the borrower has title to the property and can occupy and use it, but the lender has the right to foreclose if the borrower defaults.

In contrast, a land sale contract, also known as a contract for deed, involves the seller retaining the title to the property until the buyer fulfills the terms of the agreement, often by making all the required payments. This means that the buyer has equitable interest in the property, allowing them to occupy and use it, but they do not receive full legal ownership until the contract is completed.

Understanding this difference is essential as it affects the rights and obligations of both parties involved in the transaction, influencing how property is financed and the implications of defaulting on payments. The other options focus on aspects such as the amount financed or interest rates, which do not fundamentally differentiate the legal nature and implications of the two types of agreements.