Quiz 2: Real Estate Financing: Notes and Mortgages
An open-end mortgage is one that provides an additional amount of loan available to the borrower. Also provides the lender with security which will not be affected and any subsequent improvements will become a part of the lender's security. Here, a subordinate clause is in the terms and conditions of the loan. This indicates that the borrower also had a mortgage loan prior to the present loan. Hence, it will be secondary to the bank loan
In U.S notes are also known as real estate or borrower's note, it is a promissory note which is secured by the particular mortgage loan. Mortgage is a document which is signed by an individual with a lender by pledging the property and it is against the money which is borrowed. The difference between note and mortgage are as follows: • Note is a signed by individuals who borrow the money without putting anything on pledge. The mortgage is signed by the single person by pledging the some property. The mortgage is registered in the one recording office and in this office note is not registered. • The notes are private and personal because the payment is done to an individual person, whereas the mortgages are commercial in nature because the payment is made to the financial banks or institutions. • The note shows the total borrowing amount, and the interest on money and the repayment mode, the mortgages outline the money amount, rate of interest and repayment mode. • The note is signed by the person who get agree to pay the debt whereas the mortgage is signed by the people who have the property which is being mortgaged. The signers are same in note and mortgage. • The mortgage is recorded in the country or in the recording office of town, the note is not recorded but it goes to the lender directly
J has the right to prepay the loan only when if any prepayment clause is associated with the loan contract. This clause provides the right to J for premature payment. Or else in other case, the lender of the loan has full right to gather the interest amount fully which is prescribed in the loan contract. In addition to this, in the existence of prepayment clause, J is entitling for the penalty if some part of full loan is prepaid.