What’s the difference between a Mortgage and a Promissory Note?

 

What’s the difference between a Mortgage and a Promissory Note?

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When you take out a loan to purchase real estate, you sign both a mortgage and a promissory note.

The mortgage provides security to the lender by giving them a lien on your title. The mortgage is filed with the county. Once fully paid off, the lender will file a release (or satisfaction) of mortgage with the county.

The promissory note is the IOU that contains the promise to repay and the terms for repayment. The note is not filed with the county. Once fully paid off, it will be marked as paid in full and returned to the borrower.


Real Estate Answers: Finances

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