If your finances prevent you to purchase a new home because it is too expensive, you can seek financial support such as a loan. This method is very common and simpler for someone who cannot afford to buy a new home in cash. When you have found the lender, you are required to sign a mortgage promissory note. If you already have loans from the same lender, you need to sign the master promissory note.
Our website provides the mortgage promissory note templates for free. In case you have never known about what the document is all about, this template can be the best reference to know what kind of aspects included in the term. However, you should remember that each lender might apply different terms. However, what we want to introduce to you is the general things so you can figure out how this will work. Besides, there are many types of promissory notes templates that you can download.
A Promissory Note Definition
Mostly borrower uses the promissory note to pay the mortgage because it lifts their burden if they are not able to pay “fully”. A promissory note is a document that writes someone is willing to pay the loan. This document contains agreement and terms between borrowers and the lender. This states how much the money is borrowed and the payment method such as payment frequency and date of the payment.
Then, who can use the mortgage promissory note? The one who uses the promissory notes often is banks. Individuals and companies are also allowed to use it. Since it is secured by item of value then it is called the secured promissory note.
A Little Difference Between Mortgage and Promissory Note
Note that the promissory note and a loan are similar. However, the loan has more details about what will happen if the borrower fails to repay the debt. When the lender finally is repaid, the promissory note is held. Meanwhile, the promissory note is completely different from the mortgages. In the promissory note, the borrower promise to pay the debt. Meanwhile, the mortgage is also known as the deed of trust. For example, it enables the lender to do foreclose.
Promissory Note Elements
Some elements of promissory notes need to be your concern, such as:
- The payor – This is the person who should repay the debt.
- The payee – This is the person, an organization or a company that is lending the money.
- The date – The date of the debt payment should be set and it indicates the agreement is effective.
- The amount of the loan – The document should also state the amount of money.
- The interest rate – This should state the interest. Calculate the interest clearly and state it in a numeric value and word term.
- The first payment date – The next is the payment date. This states the first payment and every subsequent date.
- The end date – The next is the date of the end date of the debt payment. This is the last payment date so the borrower can figure out how many months they should pay a certain amount of primary with interest.