Promissory Note

A promissory note can also be called as a “note”. Note is the first document to be prepared before mortgage/deed of trust. This is the document which includes all the promises from the borrower and signed by him and handover to the lender. He promises to pay the given loan amount at the specified interest for a certain period of time. It contains all the information regarding terms and conditions of the loan. It contains some more important information regarding loan details like

• The year of completing the last installment
• The interest rate that is operating and the type of interest that has been chosen
• The address of the property
• The Note date which can be called as the mortgage date
• The loan amount
• At last the signature of the borrower down the document.

The note makes the borrower legally obligated to repay the loan amount and is generally secured by a security instrument.

There are two main and most common security instruments are:

• Mortgage
• Deed of Trust

There are two parties involved in the mortgage, the lender and the borrower. In this security instrument (mortgage), the borrower pledges the property as security for the repayment of the mortgage note.

There are three parties involved in Deed of Trust, the lender, borrower and the trustee. To some extent, trustee acts on behalf of the lender, so the property and the property related issues and to collect the repayment of the loan are look after by the trustee for the benefit of the lender. There is an advantage of the deed of trust when we compare with mortgage i.e. in many of the states, in case of default, the deed of trust can be foreclosed by the trustee. A trustee can sale the property with out having court proceeding.