Are you thinking of signing a promissory note in Indiana? This kind of monetary instrument is used across states and countries today and especially due to economic problems surfacing so much these days. Read and find out about the top differences between mortgages and promissory notes.
Generally, homeowners think of their mortgage like an obligation for the repayment of a sum of money that they have borrowed in order to construct or purchase their home. Actually however it is a promissory note that they sign as well as a part of the financing procedure. It shows the promise that they have made for paying back of the loan, apart from the terms of repayment.
The interest rate, total size of the loan and late fees are stipulated by a promissory note loan agreement. In such cases, the note is held by the lender until the payment of the mortgage loan is made in totality. It is important to note here that unlike the mortgage itself or the deed of trust, there is no entry of the promissory note done into county land records.
The promissory note may also provide people with the ability to buy a home even when they are not eligible for a mortgage. In case of such kind of a deal, which is commonly referred to as a take-back mortgage, the mechanics are quite simple. The mortgage is continued to be held by the seller on the home and a promissory note is signed by the purchaser with the assurance that he will pay the home price along with a pre-fixed interest rate in regular installments. For the seller, the promissory note payments often lead to a positive flow of cash every month.
Generally, a huge down payment is made by the purchaser in order to boost the confidence of the seller in his ability to make payments in the future. The deed of the home is used often as a type of collateral and is reverted back to the seller in case the buyer is unable to pay; and this varies according to state and situation.