After getting approved for a mortgage loan, you must sign a mortgage note to seal the contract between you, the borrower, and the lender. Signing a mortgage note ensures that you and the lender are on the same page concerning the loan taken. A mortgage note is a legal report for a loan contract between the borrower and lender during the purchase of real estate.
This note contains every detail of the loan taken, and after it has been signed, both parties are to abide by every rule or requirement stated on the mortgage note. It contains details like repayment plan, amount, interest rates, borrowed amount, and penalties if the borrower fails to repay the loan. However, it’s also referred to as a promissory note; irrespective of how they are referred to, they both mean the same thing.
Types of Mortgage Note
Depending on the lender and the type of mortgage loan issued, the types of mortgage notes are discovered. However, mortgage notes are different depending on the below types of loans.
- Private Loans: This type of loan is rendered by a private lender. It’s based on a private loan contains unique conditions set by the lender.
- Secured Loans: Secured loans are loans that are primarily used for acquiring real estate properties. Failure of loan repayment: the lender is permitted to acquire the property.
- Institutional Loan: This is a common type of loan acquired from a traditional mortgage lender. This type of loan is modulated by the state and federal lending rules.
Whatever type of mortgage loan you get decides the type of mortgage note you will have to sign.
What does a mortgage note contain?
As mentioned earlier, a mortgage note contains all the information concerning the mortgage loan taken. It seals contracts between the lender and the borrower. However, the following information this note includes
- Amount of the loan taken.
- The required interest rate that the borrower must pay.
- Repayment term.
- Purchased property information.
- Down payment amount.
- Penalties for delayed payment.
- If there is a penalty for early payments.
During the filling of a mortgage note, both parties are meant to be present. The lender and borrower need to be on the same page while this note is being written to avoid complications in the future.
Who Holds the Mortgage Note?
The lender and the borrower should both have a copy of the note after it has been filled. TThe note serves as a security for both the lender and the borrower. The original copy is held by the mortgage lender.
How do borrowers get a copy of a mortgage note?
During the process of acquiring a home or property, borrowers are given a copy of a the note. Aside from the borrower, the county recording country and the lender would also have a copy of this note.
What Happens if a Borrower Backs out on a Mortgage?
When a borrower backs out on a mortgage, the mortgage lender is permitted to proceed with repossession. Using the note, the lender can easily begin the process with a back-out notice. Unless you get in touch with your lender and inform them to begin a loss mitigation plan, the mortgage lender has a right to proceed with repossession until the property is sold. The repossession process takes a while, and it is different according to state, but after the repossession has been approved, the borrower will be ejected.
What Happens to Your Mortgage Note after the Mortgage Has Been Paid Off?
Once you have completed the payment of the loan taken for a mortgage loan, you will be given the original copy of your mortgage note by your mortgage lender. Also, it will be canceled, meaning you have fulfilled your promises made on the repayment of the loan. The lender will also let go of the hold on your home, giving you the freedom to clear it.
What Happens if I Refinance?
In such cases, the lender will replace your mortgage note with a new one and cancel it at the end of your refinancing. Once that is completed, you are set free from the signed, and the process of making future payments for your new refinancing note will begin.
Is it Possible to Sell a Mortgage Note?
After completing the repayment of your loan, you will be given the original mortgage note. Most private investors and personnel in the mortgage market are interested in buying it. If you choose, you can sell your note.
