What Is a Mortgage Promissory Note?

When financing the purchase of a home with a mortgage, you will be provided with a mortgage promissory note from your lender. A mortgage promissory note is an agreement between a purchaser and lender that states a specified amount plus interest that the buyer will repay to the lender under certain terms and conditions.

Terms of a Mortgage Promissory Note?

In addition to the agreement of repayment of the loan with interest, a mortgage promissory note includes how long the buyer has to pay the loan and states consequences that will occur if required payments aren't made at regular timely intervals. For instance, the promissory note may state that an "acceleration clause" will be enforced, requiring the buyer to pay the entire amount of the note.

The note should also state whether the loan has a fixed or variable interest rate and should include other important conditions, such as a required balloon payment or floating payment and interest rate.

As with any other financial agreement, make sure you fully understand all the terms and conditions that come along with a mortgage promissory note. You should be aware of what type of mortgage you will have, the amount of interest you will be paying and any other stipulations that come with the note before processing it.