Closing a mortgage loan is not a quick matter. The process usually takes a few hours on closing day and requires reviewing and signing dozens of documents and forms.

One of the most important in this pile? This would be your mortgage. The mortgage note is a critical (and legal) document that outlines the key details of your loan, and exactly what you agree to as a borrower.

Are you preparing to take out a mortgage loan? Here’s what you need to know about your mortgage note and what it means for you in the long run.

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A mortgage note is a legal document that details the terms of your mortgage loan. It includes information such as your loan amount, the interest rate, the due dates of your monthly payments and any other conditions set by your mortgage lender that you must meet.

You will review these details and sign the document at the end of the closing process, solidifying your agreement to the terms and your commitment to repay the loan. Your lender will also sign the note and keep it until you pay off the loan in full.

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A mortgage note is a multi-page legal document that contains key information about your mortgage agreement.

It will usually include sections on:

• Your promise to repay the loan

• Interest, including the interest rate and any changes in the interest rate you can expect (if you have an adjustable rate mortgage)

• Monthly mortgage payments, including payment due date, payment amount, and loan maturity date

• Your right to repay the loan early

• Any additional loan charges or late fees you may face

• Course of action if you fail to make payments

• Mandatory legal notices

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You will sign your mortgage at closing, but the note is still important once you have received the keys to your new home. It will also come into play at various points in your home ownership, and depending on how you repay it, it could even be back in your hands at the end.

Here are some situations in which your mortgage note may arise:

It is quite common for mortgage notes to change hands once you sign the closing documents. Many lenders sell their loans on the secondary market, which frees up cash to lend to new borrowers. When this happens, your mortgage note will be sold and transferred to another loan servicer. You will then continue to make payments as agreed in the note, only to the new administrator instead of the old one.

If your mortgage note is sold, you should get plenty of notice telling you when and where to send your new payments.

If you default on your mortgage, meaning you stop making your payments, the lender or servicer will use the mortgage note to show that you have not met the agreed terms and may proceed to foreclose your home This would mean losing your property.

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When you pay off your mortgage in full, your lender will give you possession of the mortgage note, indicating that the loan balance has been paid and that all terms of the agreement have been met.

If you refinance your mortgage, you’re technically paying off one loan and taking out another. When this happens, your old note is closed and a new note is created detailing the terms of the new loan. Your mortgage lender or servicer holds this new note until you pay off the loan balance.

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People often confuse mortgage notes with other legal documents, such as deeds and promissory notes. While they share some similarities, there are key differences to note.

A mortgage note is simply the document that describes the terms of the mortgage loan, which serves as a legally binding agreement between you (the borrower) and your lender. Mortgage promissory notes are a type of promissory note (only one specific to mortgages); there are also promissory notes in the purchase of automobiles (auto loans) and other situations that involve borrowing money.

On the other hand, a deed is a separate legal document that gives you the right to own your property. A deed of trust shows that your home will serve as collateral for the loan in question. It states that if you don’t pay back the loan, the mortgage lender can foreclose and sell the house to make up for their losses. A deed of trust is similar to a mortgage agreement, and which one you use will depend on your state of residence.

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A note is a document that describes the terms of your mortgage loan, including the interest rate, payment, term and other details. It legally binds you to the terms and obligates you to repay the loan.

You sign your mortgage note at closing, so a copy should be included with your closing documents. If you can’t find yours, you should be able to ask your mortgage lender or servicer for a copy, or you can contact your local records department.

Lenders can sell mortgage notes, the legal documents that bind borrowers to their mortgage terms, in the secondary market to free up funds for new loans. If this happens to your mortgage note, it will change where you have to send your monthly payments, but not any of the terms of your loan. You should receive advance notice of this change.

A signed mortgage note binds both the borrower and lender into a mortgage agreement, so it’s a necessary part of any home loan. Some lenders may simply call this a “payment,” although it serves the same purpose.

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