What is the legal document called that requires a borrower to repay a mortgage loan?

What is the legal document called that requires a borrower to repay a mortgage loan?

• A. Mortgage Agreement
• B. Promissory Note
• C. Loan Contract
• D. Repayment Agreement

Answer: (B)

The legal document that requires a borrower to repay a mortgage loan is known as a promissory note. This document is a crucial part of the mortgage process because it outlines the borrower's promise to repay the loan under specific terms, including the amount of money borrowed, interest rates, and the repayment schedule. The promissory note serves as the borrower's written commitment to the lender and is enforceable in a court of law, which means that if the borrower fails to make payments as agreed, the lender can take legal action to recover the owed amount. While other choices such as a mortgage agreement or loan contract might sound similar, they serve different purposes. The mortgage agreement typically describes the conditions under which the property will serve as collateral for the loan, while a loan contract may encompass various terms and conditions beyond just the borrower’s promise to pay back the loan. A repayment agreement usually indicates terms of payment alterations or forbearance arrangements, rather than serving as the initial commitment to repay the loan. Therefore, the promissory note is the definitive legal document specifically highlighting the borrower's obligation to repay the mortgage loan.

The legal document that requires a borrower to repay a mortgage loan is known as a promissory note. This document is a crucial part of the mortgage process because it outlines the borrower's promise to repay the loan under specific terms, including the amount of money borrowed, interest rates, and the repayment schedule. The promissory note serves as the borrower's written commitment to the lender and is enforceable in a court of law, which means that if the borrower fails to make payments as agreed, the lender can take legal action to recover the owed amount.

While other choices such as a mortgage agreement or loan contract might sound similar, they serve different purposes. The mortgage agreement typically describes the conditions under which the property will serve as collateral for the loan, while a loan contract may encompass various terms and conditions beyond just the borrower’s promise to pay back the loan. A repayment agreement usually indicates terms of payment alterations or forbearance arrangements, rather than serving as the initial commitment to repay the loan. Therefore, the promissory note is the definitive legal document specifically highlighting the borrower's obligation to repay the mortgage loan.