Short Answer
A promissory note is a legal document you sign at closing that contains your promise to repay the mortgage loan. It includes the loan amount, interest rate, repayment schedule, and consequences of default. The note is your personal obligation to repay, separate from the mortgage or deed of trust that gives the lender a claim on the property. If you default, the lender can pursue you personally for the unpaid balance, not just foreclose on the home.
The promissory note is one of the most important documents you sign at closing. It is your binding promise to repay the loan under the terms specified. The note includes the loan amount, the interest rate (fixed or adjustable), the monthly payment amount, the number of payments, the due date of the first payment, the maturity date when the loan must be fully repaid, prepayment terms (whether you can pay extra or pay off early without penalty), and default terms (what happens if you do not make payments). The promissory note is typically held by the lender and is a negotiable instrument. It can be sold to investors, which is why your loan may be serviced by a different company than the one you applied with. Unlike the mortgage or deed of trust, which gives the lender a lien on the property, the promissory note is your personal guarantee. If you default, the lender can foreclose on the property and also pursue you personally for any deficiency if the foreclosure sale does not cover the loan balance.
Bob's Advice
Redfin Senior Agent · AI Certified Agent
The promissory note is serious business. It is your personal promise to repay the loan, and it stays with you even if the property goes into foreclosure. I always tell my clients to read the note carefully and ask questions before signing. Your attorney will review it with you at closing. If you have questions about any term, do not hesitate to ask. This is your commitment, and you should understand every word of it.
Related Questions
Ready to Take the Next Step?
Every situation is unique. Let us talk about your specific goals and create a plan that works for you.