What is a mortgage note?

IOU money for this house, essentially.

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When you take out a mortgage on a home, there are several important documents to register that mortgage and make it official. These are documents that you’ll sign during closing, also called closing documents, and one these documents is the mortgage note.

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The definition of a mortgage note

A mortgage note is a type of promissory note used specifically in mortgage loans.

A promissory note is essentially a signed “IOU”. It is a document held by your lender that states that you (also called the maker or the borrower or the promiser) promise to repay your lender (also called the payee or the holder or the promisee). A promissory note can be written for any type of loan, but when it’s written for a home loan, it’s called a mortgage note.

The mortgage note differs from a regular promissory note in that it is a legal contract filed with the local government (the county clerk or department of deeds) and states that the lender has a lien on your property and has the right to begin foreclosure through the court if the terms of the mortgage loan are not met.

The mortgage note includes the terms of your loan, including:

  • Amount of loan
  • Interest rate
  • Duration of loan
  • Payment due dates
  • Late fees and other penalties, including right to foreclose

How to get a copy of your mortgage note

The mortgage note is part of your closing papers and you will receive a copy at closing.

If you lose your closing papers or they get destroyed, you can obtain a copy of your mortgage note by searching the county’s records or contacting the registry of deeds.

It’s also possible to obtain a copy from the company who services your loan (that is, the company you get billing statements from). Sometimes the company that services the loan is the same company that owns it; sometimes it’s not.

The loan owner, also called the mortgage holder or mortgage owner, generally stays the same. But buying and selling mortgages is legal, and it’s possible that at some point your mortgage note may be purchased by another party. In that case, you would get a new note with a different listed owner.

Mortgage notes and deed of trust

In some state, mortgages are called deeds of trust.

The two operate essentially the same way, but while mortgages have mortgage notes, which name two parties — borrower and lender, deeds of trust have a separate promissory note that names three parties —borrower, lender, and trustee.

When you take out a mortgage, you hold the property title. The mortgage note, filed with the local government, ensures that if you don’t pay, the lender can sue you through the court system to start foreclosure. This is called judicial foreclosure.

If you have a deed of trust, instead of you holding the property title, the trustee hold the title until the loan is repaid. If you don’t pay, the trustee may start the foreclosure process without going through court. This is called non-judicial foreclosure.

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