Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing what is a promissory note in real estate.
When purchasing a property, most people will sign two main documents; a mortgage, and a promissory note. In this episode, Charles discusses what promissory note is, and why is it utilized in the property purchasing process.
o The mortgage lists the responsibilities for keeping the property in good condition while maintaining property insurance
o The lender will record the mortgage, specific to the particular property, in the county land records, thus establishing a lien against the property.
o The document contains a number of standard clauses between the borrower and the lender including an “acceleration clause.” This specific stipulation allows the lender to demand repayment of the entire loan balance if the borrower defaults, for example by not making loan payments. The mortgage document explains how the lender may foreclose if the loan is not repaid in full after the acceleration has been enacted.
o The mortgage does not require the borrower to repay the loan, and you are not personally liable for repaying the loan if you sign the mortgage, however, you will become personally liable for the loan if you sign the promissory note.
o The promissory note includes the terms of the loan; such as the interest rate (fixed or variable), the late fee amount, the total loan amount, the term of the loan, and if there are any prepayment penalties.
o, Unlike the mortgage that is recorded with the county land records, the lender keeps possession of the promissory note.
o The note provides the lender with the ability to collect on the loan if the borrower fails to make payments.
o When the borrower finishes paying off the loan, the promissory note is marked “paid in full,” and returned to the borrower.
Charles:
Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing what is a promissory note in real estate.
Charles:
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Charles:
When obtaining a mortgage to purchase a property, the buyer, the mortgager will typically sign two main documents, a mortgage or a deeded of trust and a promissory note.
Charles:
The mortgage is normally what people think of as a loan. However, the mortgage is the contract you sign with the lender in order to provide collateral for the loan. The mortgage permits the lender, the right to sell the property through foreclosure and use the proceeds from the foreclosure sale to recover funds that were initially lent out if the borrower stops making loan payments. Now the mortgage lists the responsibilities for keeping the property in good condition while maintaining property insurance. The lender will record the mortgage specific to the particular property and the county land records, thus establishing a lien against the property. The document contains a number of standard clauses between the borrower and the lender, including an acceleration clause. This specific stipulation allows the lender to demand repayment of the entire loan balance if the borrower defaults, for example, by not making loan payments. The mortgage document explains how the lender may foreclose if the loan is not repaid in full after the acceleration has been enacted.
Charles:
The mortgage does not require the borrower to repay the loan, and you’re not personally liable for repaying the loan. If you sign the mortgage, however, you will become personally liable for the loan if you sign the promissory note. Now, the promissory note is a separate contract from the mortgage and that establishes the loan obligation. The document includes the borrower’s promise to repay the loan and the amount borrowed while outlining the terms repayment. Anyone who signs a promissory note is purchasing liability for repaying the loan. Now, the promissory note includes the terms of the loan, such as interest rate, fixed or variable, the late fee amount, the total loan amount, the term of the loan, and if there are any prepay and penalties. Unlike the mortgage that is recorded with the county land records, the lender keeps position on the promissory note. The note provides the lender with the ability to collect on the loan if the borrower fails, fails to make payments. When the borrower finishes paying off the loan, the promissory note is marked, paid in full, and returned to the borrower. So hope you enjoyed pleasing. Remember to rate reviews, subscribe, submit comments, and potential show topics at globalinvestorspodcast.com. Look forward to two more episodes next week. See you then.
Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar, LLC, exclusively.
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