Definition: The mortgage, note, and deed are all types of loans used to finance home purchases. The Mortgage refers to a loan made by a lender in exchange for collateral or security that pays off the borrower's principal balance over time through regular payments. The Note is a loan with an interest rate fixed at the original market value of the property. The interest rate is often set by law, such as 5% or 6%, and can vary depending on the type of mortgage. A note typically does not require a down payment, which makes it more affordable for people who cannot afford a home loan outright. The Deed is a written agreement between the borrower and the lender that outlines terms of the loan, including how much the loan will be borrowed, how the interest rate will be calculated, and when payments will be made. The deed typically includes legal title to the property, as well as any other documents or agreements that must be in place before the loan can be processed.
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