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.
Every term like this one lights up in the step you're on.
Free to set up. No credit card.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
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