Definition
A promissory note is the legal promise to repay the loan according to specified terms. It defines loan amount, interest rate, payment schedule, and your obligations. You typically sign it at closing, creating personal liability for the debt.
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The promissory note is a negotiable instrument that the lender may sell to other entities in the secondary mortgage market. It contains the borrower's personal promise to pay, making them legally liable for the debt. Borrowers typically sign the note at closing.
Pro Tip
Carefully review the promissory note at closing to ensure all loan terms (amount, rate, payment, term) match your loan estimate and expectations.
Example
A promissory note states the borrower promises to repay $300,000 at 6% interest in 360 monthly payments of $1,799, commencing the first day of the month after closing.