Buying a house, the American dream,
and like most everybody else,
it takes a loan to have that part of the American dream.
When you're getting down to the nitty-gritty of the loan process,
you'll be signing a whole lot of papers.
But what are all these parchments you're scribbling on?
Well, each and every one is a legally binding document
with legal consequences.
And two of those documents are more important
than any of the others--
the note and the mortgage.
The note, which is also called a promissory note,
is really just a fancy IOU.
The note says you owe the bank
and that you're going to pay them back over time
while also detailing how much time you have to pay them back
and what the interest rate is.
Not only that, the note will also contain information
on how you and the bank can contact one another.
Now, the mortgage is something a little different.
A mortgage is a lien against your home
to guarantee the payment of the note.
It follows the note around like a faithful sidekick.
The mortgage is what gives the bank the right
to foreclose on your home if you do not pay back the note.
Like the note, the mortgage will also consist of additional information
such as how the bank must notify you regarding nonpayment
and any additional money you may owe the bank for taxes
and insurance.
The mortgage is what gets filed or recorded in official county records,
so that others can see if a lender has some rights
to the value of the house--
sort of like first dibs
on any money that would come from selling the house.
Everything comes to a head appropriately at the closing
of the contract on the house.
Here, the buyer and seller will meet
along with the appropriate bank agents and representatives.
The seller will sign over the deed of the house to the buyers
and they in turn will sign the note and the mortgage
along with any other loan papers.
The language in these documents is generally considered non-negotiable
from the bank's point of view.
Double check all the numbers and information.
Have the closing agent explain whatever isn't clear
if need be.
If the terms in the loan papers are different from what you agreed on,
do not sign.
In those cases, and because of the fixed nature
of the closing documents,
you don't have much choice other than walking away
at that moment to refigure things out.
For help in understanding all of these documents
and any other loan issues, turn to LegalYou.
LegalYou, you can do this.