A promissory note is paper evidence of a debt that a borrower has agreed to owe a lender.
When you sign a promissory note, you are promising to repay the loan according to the terms outlined in the note. If you default on the loan, the lender may take legal action against you to collect the debt, which could include foreclosing on your home.
This is not a mortgage lender as there is no collateral. Furthermore, you would instead receive a Commitment Letter.
A Promissory Note contains the following components:
- It outlines the amount of the loan, its term, interest rate, and schedule for repayment.
- All of these parameters are legally binding.
- The promissory note is issued by the lender and then signed by the borrower.
- It must be witnessed and initialed by the lender.
- A lawyer is usually involved.
It is important to carefully review the terms of the note and make sure that you understand all of the obligations and responsibilities involved before signing it. You should also compare different mortgage offers from different lenders to find the one that best suits your needs.
If you are questioning your Promissory Note or the terms of the agreement please contact your lawyer, and your mortgage broker so we can aim you in the right direction and create a solution for you.
