Promissory note
The signed promise to repay a loan, stating the amount, rate, payment schedule and what happens on default. The mortgage or deed of trust is the separate document that ties the debt to the property.
Also called: note, mortgage note
Related terms
A loan used to buy real estate, with the property pledged as security. If the borrower stops paying, the lender can foreclose. Some states use a deed of trust instead of a mortgage document, but people call both a mortgage.
A document used in many states instead of a mortgage, where a neutral trustee holds title as security for the loan until it is paid. It usually allows non-judicial foreclosure, which is faster than going to court.
An arrangement where the seller lends the buyer some or all of the purchase price, and the buyer pays the seller over time. Terms are negotiated, often with a balloon payment, and the seller usually holds a lien until paid.
When one side fails to meet its obligations under a contract or loan. In a purchase, the contract spells out remedies, which often include the seller keeping the earnest money.
The percentage a lender charges to borrow money, used to figure the interest part of each payment. It does not include fees, which is why the APR is often higher.