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Difference between a Note and Mortgage
Barrister Amna (Alevels Academy Islamabad)
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9/4/2024
A Levels Academy Islamabad
Category
📚
Learning
Transcript
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00:00
Buying a house, the American dream.
00:03
And like most everybody else, it takes a loan to have that part of the American dream.
00:08
When you're getting down to the nitty-gritty of the loan process,
00:11
you'll be signing a whole lot of papers.
00:14
But what are all these parchments you're scribbling on?
00:17
Well, each and every one is a legally binding document with legal consequences.
00:22
And two of those documents are more important than any of the others,
00:26
the note and the mortgage.
00:29
The note, which is also called a promissory note,
00:33
is really just a fancy I-O-U.
00:36
The note says you owe the bank and that you're going to pay them back over time,
00:40
while also detailing how much time you have to pay them back
00:43
and what the interest rate is.
00:45
Not only that, the note will also contain information
00:48
on how you and the bank can contact one another.
00:51
Now, the mortgage is something a little different.
00:54
A mortgage is a lien against your home to guarantee the payment of the note.
00:58
It follows the note around like a faithful sidekick.
01:01
The mortgage is what gives the bank the right to foreclose on your home
01:04
if you do not pay back the note.
01:07
Like the note, the mortgage will also consist of additional information,
01:11
such as how the bank must notify you regarding nonpayment
01:14
and any additional money you may owe the bank for taxes and insurance.
01:18
The mortgage is what gets filed or recorded in official county records
01:23
so that others can see if a lender has some rights to the value of the house.
01:27
Sort of like first dibs on any money that would come from selling the house.
01:32
Everything comes to a head, appropriately, at the closing of the contract on the house.
01:37
Here, the buyer and seller will meet along with the appropriate bank agents and representatives.
01:42
The seller will sign over the deed of the house to the buyers,
01:45
and they, in turn, will sign the note and the mortgage along with any other loan papers.
01:50
The language in these documents is generally considered non-negotiable from the bank's point of view.
01:55
Double-check all the numbers and information.
01:58
Have the closing agent explain whatever isn't clear, if need be.
02:02
If the terms in the loan papers are different from what you agreed on, do not sign.
02:07
In those cases, and because of the fixed nature of the closing documents,
02:12
you don't have much choice other than walking away at that moment to re-figure things out.
02:17
For help in understanding all of these documents and any other loan issues,
02:21
turn to LegalYou.
02:23
LegalYou. You can do this.
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