When you find a reliable mortgage lender, they will want you to legally “promise” that you will repay the loan. Thus, in addition to your mortgage contract, you may be requested to sign a promissory note – a financial instrument that shows you agree to be indebted to the lender.
Here are five aspects to pay attention to before signing it.
1. Amount
Of course, your loan amount will be in your contract with the mortgage lender. However, you should confirm it’s the same in the promissory note.
2. Interest rate
The interest rate you agreed on with your mortgage lender will be included in the promissory note. The lender may also include circumstances in which the interest rate can change.
3. Dates
The promissory note will include the date it becomes effective, the date to make the first payment, the dates of subsequent ones and when it will end.
While you should know all these dates, pay close attention to the last one. Your mortgage lender may give you a final date that allows you to pay equal amounts in the determined intervals until you repay the loan, or you may need to pay any unpaid amount on a specific date in a lump sum.
4. Where to make payments
Your mortgage lender will provide details of where to send payments. If you are unfamiliar with the payment method, contact them for more information to avoid costly mistakes.
5. Consequences for not making payments
A promissory note includes the consequences a borrower may face should they fail to make payments within the agreed interval. For instance, it can state the late fees one may incur.
If your mortgage lender gives you a promissory note, you could get legal help to understand it in-depth.
