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A mortgage note, also known as a promissory note, is a legal agreement to repay your mortgage. It outlines the terms agreed upon between you and your lender, including the amount you owe, your interest rate and what happens if you don\u2019t repay the loan. You\u2019ll sign your mortgage note at closing.<\/p>\n
A mortgage note works by legally binding you, the borrower, to repay your home loan. By signing a mortgage note, you give the lender the right to foreclose<\/a> on your property should you fail to make payments according to the terms of the contract.<\/p>\n It\u2019s important to read a mortgage note carefully. If there is something that you didn\u2019t agree to, contact your lender right away. Don\u2019t sign anything unless both sides agree on the contents of the document. Seriously consider hiring a real estate attorney<\/a> to help you with this step if you do not already have one.<\/p>\n Once you understand everything you\u2019re responsible for, including monthly payments and the consequences if you don\u2019t make those payments, you can sign the mortgage note when you close on your home.<\/p>\n A mortgage note lays out the key information about your home loan, including:<\/p>\n You\u2019ll also get to read up on your obligations and rights as a borrower. Different mortgage notes may have different expectations. For instance, if you\u2019re using the property as your primary residence, that might be outlined in your mortgage note.<\/p>\n It\u2019s important to clarify that a mortgage note is not the same as a mortgage. While both are legally binding, a mortgage is a type of secured loan<\/a> used to buy a home whereas a mortgage note is the document you sign at closing promising to repay that loan.<\/p>\n The mortgage note comes from your mortgage lender. This is the financial institution that originates your loan.<\/p>\n Keep in mind that the lender that originates your loan may not always be the lender that manages your loan. In many instances, once the lender originates a mortgage, it sells it off in the secondary mortgage market to Fannie Mae or Freddie Mac. This provides the lender with funds to make loans to more borrowers.<\/p>\n Your mortgage being sold doesn\u2019t impact the terms of the mortgage itself or how much you pay each month. You\u2019ll keep the same monthly payment, interest rate and repayment terms regardless of who holds your mortgage note. If your loan is sold to a new servicer, you\u2019ll need to redirect your payments to the new servicer\u2019s address. The only time your terms could change is if you decide to refinance your mortgage<\/a>, in which case you\u2019ll receive a brand new loan.<\/p>\n Buying a home is one of the biggest financial decisions you\u2019ll make in your lifetime. A mortgage note is important because it details exactly what you\u2019re on the hook for as a homebuyer and loan borrower. You\u2019ll see details about how much you owe, when you owe it and what happens if you\u2019re late on payments or default on the loan.<\/p>\n Most lenders offer a grace period\u2014for instance, 15 days\u2014after your payment due date. If you can make your payments within this grace period, you\u2019ll only be charged a percentage of the overdue payment\u2019s principal and interest. Missing multiple payments will lead to your lender sending you default notices, the details of which are also mentioned in your mortgage note.<\/p>\n Once your loan goes into default, the full balance can immediately become due and there\u2019s a chance you could face a lien on your home. Having a lien on your home means your lender has a legal claim to your property until you pay off your outstanding debt. If you\u2019re unable to repay the loan, your lender can foreclose on your home to recover the outstanding debt.<\/p>\n At closing, you\u2019ll receive a copy of all the paperwork you sign, including your mortgage note. But if you misplaced or lost your copy, you can request a copy from your mortgage servicer<\/a>. Some companies might require you to make your request for a mortgage note copy in writing. Your transaction history will show where your payments go every month, so you\u2019ll be able to contact the mortgage servicer that way.<\/p>\n Remember that the current loan owner may not be the same lender who originated your loan or the servicer you pay every month. If your loan was sold, then either your old lender or the new owner should have provided you with a notice, including the name, address and phone number of the new owner. If you don\u2019t have this information, contact your servicer. You can also use the lookup tool on the Fannie Mae<\/a> or Freddie Mac<\/a> websites to see if one of them owns your mortgage.<\/p>\n Before you sign a mortgage note, make sure all the information in the document is correct and both you and your lender are clear about the terms and requirements. If you aren\u2019t sure what you\u2019re signing or have questions, ask your lender or the representative from the title company at closing, or consult with a real estate attorney. It\u2019s important to have all your questions answered before you sign any legal documents.<\/p>\nWhat to Expect in a Mortgage Note<\/h2>\n
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Who Holds the Mortgage Note?<\/h2>\n
Why Is a Mortgage Note Important to the Borrower?<\/h2>\n
How to Get a Copy of the Mortgage Note<\/h2>\n