Promissory note
The written promise to repay the loan. It spells out the amount, interest rate, payment schedule, and what happens on default. The note is what you actually owe; the mortgage or deed of trust just secures it.
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Part 1 of 4
Why a seller cares
The note is the promise to repay; the mortgage is the house standing behind it. If you carry financing for a buyer, the note is the document that says what you are owed, and it is what you would sue on.
Part 2 of 4
A simple example
You sell with owner financing. The buyer signs a note for $180,000 at 6.5% over 20 years, and a mortgage giving you a lien on the home to secure it.
| The document | What it does |
|---|---|
| The promissory note | The debt: amount, rate, schedule, what default means |
| The mortgage or deed of trust | The security: your right to foreclose if the note is not paid |
| Both together | A loan you can collect on and a house you can take back |
The note is the debt. The mortgage is what makes the house answer for it.
Part 3 of 4
What people get wrong
That the mortgage is the loan. The note is the loan; the mortgage is the lien that secures it.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines promissory note in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
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