NOTE IN MORTGAGE
This is also known as a mortgage note, a real estate lien note, borrower’s note or a promissory note. It is a legal instrument in which the issuer promises to pay a particular sum of money to the other party (payee) within a specified period of time. It is an instrument secured by a mortgage loan in which a promise is written stating that a particular amount of money in addition to the interest is to be paid within a certain period of time.
The mortgage note stipulates the amount of debt and the interest rate, and obligates the borrower, who signs the note, personally responsible for repayment. In certain jurisdictions, especially in foreclosure proceedings, borrowers may require the foreclosing party to produce the note as proof that they are the real owners of the debt.
Mortgage notes usually determine the kind of mortgages. For example, if the mortgage note comes with a fixed interest rate and payments, then it is a fixed-rate mortgage loan if the mortgage note comes with a fixed interest rate with adjustable payments, then this is a graduated payment mortgage. If the mortgage note comes with a floating interest rate and payment amount, then this is an adjustable-rate mortgage.
An interest-only loan is the type of loan that calls for the payment of interest and no principal, leaving behind the full principal due at maturity.
A mortgage note may includes the following:
- Late charge amount
- Name(s) of the borrower
- Property address
- Interest rate (fixed or adjustable)
- Amount of the loan, and
- Term/duration (number of years).
These days mortgage notes are traded and bought by investors. It offers investors streams of funds over a given time.
Benefits of buying Mortgage notes:
- Higher rate of return than one can get at a bank.
- Less risk than with the stock market.
Contact Freedom Rings to find out what your options are with your Note in Mortgage.