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Taking out a mortgage is a big deal. There’s a slew of new terms to learn — like “mortgage note” — and details to understand. Here, we’ll explain what a mortgage note is, how it differs from a mortgage loan, and offer you insight to help you feel comfortable in comparing mortgages.
What is a mortgage note exactly?
A mortgage is a loan that allows you, as the borrower, to finance a home. The loan pays the seller in full for the property. In return, you make monthly payments to repay the amount you borrowed. The entire transaction is detailed in a mortgage note, also called a promissory note. When you borrow money to purchase a home, the lender provides you with a copy of the mortgage note. To protect you and the lender, this note tells you everything about the loan so there are no misunderstandings.
Just as you are provided a list of required documents for a mortgage application and must provide those documents, a lender has a list of documents they must provide to you. Each of these documents is designed to help you understand the mortgage into which you are entering.
A mortgage note is not to be confused with other forms provided by the lender, such as the loan estimate or closing disclosure. Each form is clearly marked. Once you sign a mortgage note, you’re a homeowner, and are legally obliged to carry through with the agreement to repay the real estate debt.
What can I learn from a mortgage note?
Among the information found in a real estate mortgage note is the following:
- The name of the lender and borrower
- Type of loan (for example, if it’s a conventional loan)
- Amount of your down payment
- Loan amount
- Interest rate
- If the interest rate is fixed or adjustable
- When payments are due
- Loan term
- If the loan includes a prepayment penalty
- What happens if you stop making payments</…….
Source: https://www.fool.com/the-ascent/mortgages/what-is-mortgage-note/
