Mortgage: A mortgage is a legal document that pledges a property as collateral for the repayment of a loan. It is used to secure a loan for the purchase of real estate, typically a home. The mortgage is recorded with the local government and becomes a lien on the property. This means that if the borrower fails to repay the loan according to the terms of the mortgage, the lender has the right to foreclose on the property and take possession of it.

Note: A note, also called a promissory note, is a legal document that evidences the existence of a loan and the borrower’s promise to repay the loan according to the terms outlined in the note. The note includes details such as the loan amount, interest rate, and repayment schedule. A note is a binding agreement between the borrower and the lender, and serves as proof of the borrower’s debt.

In most cases, a mortgage and note are used together in a home loan transaction. The borrower signs both the mortgage and the note at closing. The mortgage is recorded with the local government and serves as a lien on the property. The note is held by the lender and serves as evidence of the loan. The mortgage and note are separate but related documents, and both are important in the loan transaction process.

It’s worth noting that in some states, a mortgage and a Deed of Trust are used instead of a mortgage and a promissory note. In a Deed of Trust, the borrower transfers legal title to the property to a trustee, who holds the property in trust as security for the loan, until the loan is paid off, at which point the trustee conveys the property back to the borrower.

In summary, a mortgage is a legal document that pledges a property as collateral for the repayment of a loan and serves as a lien on the property, while a note, also called a promissory note, is a legal document that evidences the existence of a loan and the borrower’s promise to repay it, and serves as proof of the borrower’s debt. Both are important in the loan transaction process, and in most cases, are used together.

If you are interested in purchasing or selling a home, or if you have any related questions call us today at (973) 500-8024 or (212) 960-8308, or submit your contact information below and we can contact you directly.