So, the first thing I would do is look up the title to the home and see if the security instrument is still valid.

The security instrument which you were granted into the property, was this a first lien?

A Lease Option in Texas is not a very good idea if the lease is for more than 6 months (even if they are separate instruments).  

I am curious how these two debt instruments differ in their terms and when it’s most appropriate to use each?

Poor as in "unsuitable to build upon"?

Get out of that 401k as quickly as possible - IRS Code 72t.Buy real estate that cash flows, recruit good management.Protect your family and cash in financial instruments that are difficult for govt confiscation - life insurance, annuities - avoid saving in traditional banks.Minimize your tax footprint - avoid all tax deferred strategies.

The underlying real property securing the note is what serves to scope out whether the purchase of the note and security instrument is worth the price.

Thank A deed of trust is the instrument that records the loan from the lender to the borrower against the property.

Borrower shall occupy, establish, and use the Property as Borrower’s principal residence within sixty daysafter the execution of this Security Instrument (or within sixty days of a later sale or transfer of the Property) and shall continue to occupy the Property as Borrower’s principal residence for at least one year after the date of occupancy, unless Lender determines this requirement will cause undue hardship for Borrower, or unless extenuating circumstances exist which are beyond Borrower’s control Borrower shall notify Lender of any extenuating circumstances

I had never heard of such an instrument.