Mortgage Note
The borrower's signed promise to repay the loan, including the amount, rate, term, and payment terms.
The note is the actual loan agreement, a legally binding IOU. It states the principal balance, interest rate (or how it adjusts on an ARM), term, payment amount, where to send payments, and the consequences of default.
The mortgage (or deed of trust, depending on state) is a separate document that grants the lender the lien against the property to secure the note. The note creates the obligation; the mortgage attaches the obligation to the collateral.
Notes are bought and sold in the secondary market all the time. Most originating lenders sell loans to investors shortly after closing, which is why borrowers often receive notice that their servicer is changing within the first few months, the loan didn't change, but the holder did.
Related terms
Other terms you'll see alongside Mortgage Note
The asset pledged to secure a loan, which the lender can take and sell if the borrower defaults.
A legal claim against property that secures a debt and must be paid off before clear title can transfer.
The company that collects monthly payments, manages the escrow account, and handles borrower service on a loan after closing.
The signed legal instrument in which a borrower promises to repay a specified sum under defined terms.
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