Mortgage and Note Preparation
When you purchase real estate and someone lends you the money, you will be signing a note and mortgage. If you obtain the money from a bank or institution, they will prepare a promissory note and mortgage. When a seller prepares a note and mortgage, it is called owner financing. The terms of the note and mortgage are negotiated in conjunction with the sale and purchase of the property. Mortgages may have long term payments scheduled for 30 years, however, if a mortgage has a clause that the unpaid balance can be paid after 3 or 5 years, it is called a balloon payment. Provisions that need to be included in a note and mortgage include late charges, insurance requirements, and taxes. For commercial mortgages, there are provisions concerning environmental problems. The note should address at what point the lender can demand payment in full.