One of the most if not the most important documents a Borrower will sign at the Closing for their new home is the Note. The reason why I feel the Note is the most important document a Borrower will sign at the Closing for their new home is because of the commitment a Borrower makes when they sign it. No other document the Borrower will sign in the purchase of their new home will obligate them to the extent the Note does. This is because The Note Is The Written Promise To Repay The Funds Borrowed.
The Note consists of several pages, and goes into great detail to make one simple statement, that upon signing the Note the Borrower agrees to repay the Holder of the Note the Debt with Interest. It is that simple, and the most important commitment the Borrower makes at the Closing Table.
The Note will state the amount of the debt and the interest rate. Once the Buyer signs this document they are personally responsible to repay the amount stated on The Note. The Note contains a lot of the same terms and conditions which are also stated in "The Mortgage". These two documents may be similar, but they have very significant differences and carry different obligations.
While The Note Is The Written Promise To Repay The Funds Borrowed, The Mortgage is the legal device used to secure the property, and pledges the title of the property as security for the Loan. Both documents clearly stipulate what the obligations of the Borrower are, and what will happen if the Borrower defaults on the Loan.
The Note is a written promise to repay, it does not get any clearer than that. Borrowers sign the Note with the full understanding of what it means, and Lenders lend the money to purchase a house based upon that written promise.
So before a Borrower signs the Note, they need to be very sure it is a commitment they are willing to make, and not claim later they did not understand what they were signing, or worst claim they did not have an obligation to repay. If the Borrower does not understand anything else in the huge stack of documents they will sign at the Closing, they need to understand this one thing The Note Is The Written Promise To Repay The Funds Borrowed.
A Borrower should not sign the Note if they are not committed to complying with the obligations contained within the Note. Signing this document, and then not complying with it, carries consequences that are long lasting and far reaching. Borrowers need to understand what they sign, and not sign if they don't. Claiming later they did not understand, does not relieve them of their obligation. Borrowers have every opportunity to ask questions during and before the Closing. It is their responsibility to do so if something has not been explained to their satisfaction.
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