What is a promissory note in the context of a mortgage?

What is a promissory note in the context of a mortgage?

• A. A document granting ownership of the property
• B. A written promise to pay the borrowed amount
• C. A statement of condition for the property
• D. An agreement between buyer and seller

Answer: (B)

In the context of a mortgage, a promissory note is fundamentally a written promise to repay the borrowed amount, which typically includes both the principal and interest over a specified period. This legal document outlines the borrower's commitment to the lender and contains all the relevant terms of the loan, such as repayment schedule, interest rate, and any penalties for late payments. The promissory note is essential because it serves as evidence of the debt and can be enforced legally if the borrower defaults on the loan. The other options do not accurately capture the essence of a promissory note. While the document granting ownership of the property relates more to the deed of trust or mortgage itself, a statement of condition for the property pertains to its physical state and does not involve financial obligations. An agreement between buyer and seller focuses on the transaction of property ownership rather than the borrower's repayment commitment. Thus, the correct definition of a promissory note as a written promise to pay the borrowed amount is clear and distinct from these other concepts.

In the context of a mortgage, a promissory note is fundamentally a written promise to repay the borrowed amount, which typically includes both the principal and interest over a specified period. This legal document outlines the borrower's commitment to the lender and contains all the relevant terms of the loan, such as repayment schedule, interest rate, and any penalties for late payments. The promissory note is essential because it serves as evidence of the debt and can be enforced legally if the borrower defaults on the loan.

The other options do not accurately capture the essence of a promissory note. While the document granting ownership of the property relates more to the deed of trust or mortgage itself, a statement of condition for the property pertains to its physical state and does not involve financial obligations. An agreement between buyer and seller focuses on the transaction of property ownership rather than the borrower's repayment commitment. Thus, the correct definition of a promissory note as a written promise to pay the borrowed amount is clear and distinct from these other concepts.