When your homebuying process closes, you are given a document that shows the agreement terms between the borrower and the lender called a mortgage note.
The mortgage note is like a promissory note secured through a specified mortgage loan. This is a document similar to a written pledge that says how you will pay the loan, starting from the amount of money with its interest to the length of time to repay the loan.
To be knowledgeable about the mortgage note, here are some of the things that you need to know about it:
4 Facts You Need to Know About Mortgage Notes
1. The Mortgage Note Includes All of the Terms of the Agreement between the Lender and Borrower.
As mentioned before, the mortgage note is like a promissory note. All of the financial details of the payment process are stated in this document. Moreover, it also includes the consequences and penalties that the borrower has to go through if they do not repay the loan.
Some of the important details in a mortgage note are:
- The mortgage down payment amount
- The total amount of mortgage loan
- The interest rate
- The duration of the loan
- The due date of payments
- The prepayment penalties (if there are)
- The monthly or bi-monthly payments (if required)
If you’re a borrower, it is important to make sure that a copy of the mortgage note will be provided to you in your home buying process. That way, the terms of the agreement will be clear. It is advised to have a lawyer check the accuracy of the mortgage note.
2. The Mortgage Note Can Be Bought and Sold on a Secondary Market.
The mortgage note serves as a protection for both lender and borrower, so it is accessible through a secondary market. Lenders can sell the mortgage note to investors that prefer safe and risk-free investments.
Real estate inventors technically own the mortgaged property because they bought it from lending institutions. It is safe because the investors won’t lose money unless the borrower prepays their loan or fails to pay the loan on time.
3. The Original Mortgage Note Will Be Given to the Borrower Once the Loan Is Fully Paid.
As a loan borrower, it is important to follow the terms given in the mortgage. It doesn’t really affect the borrower if the holder of the mortgage note changes because the terms will remain the same no matter what. They will get ahold of the original copy of the document once they have paid off the loan. Once the loan is also fully paid, the borrower will own their home with no issues.
4. If the Mortgage Is Paid in Full, The Borrower Will Own the Property.
If the borrower decides to pay the mortgage fully, the mortgage note will be canceled and given to them. This means that they officially own the home without owing the lender any money and have fulfilled all the terms of the loan.
When you’re buying a home, it’s important to learn about all of the documents included in your home loan. Make sure that they’re all accurate to prevent issues from arising. Learn about the terms of the agreement, and pay attention to all of the changes and details throughout the whole process. When buying a home, make sure that you reach out to the best mortgage broker. Here at New Frontier Financial, we help our clients reach their goals to purchase a home or refinance a mortgage. We also help those that plan to invest in real estate in Texas. Call us at (469) 886-8300 to consult about commercial mortgages in Dallas, Texas!