What are the two primary documents involved in the payment of a loan?

The two primary documents involved in the payment of a loan are the mortgage and the promissory note.

The promissory note is a legal document that outlines the terms of the loan, including the amount borrowed, the interest rate, the repayment schedule, and the consequences of default. It serves as a promise by the borrower to repay the lender according to those specified terms. This document establishes the borrower's legal obligation to repay the debt.

On the other hand, the mortgage is a security instrument that ties the loan to the property being financed. It grants the lender a claim against the property if the borrower fails to repay the loan. Essentially, the mortgage is a means for the lender to secure their interest in the property until the loan is fully repaid.

Together, these two documents create the framework for the lending arrangement, wherein the promissory note establishes the borrower's commitment to repayment, and the mortgage provides the lender with a legal right to the property in the event of default. This relationship is essential for understanding real estate financing, as both documents are crucial for ensuring that the terms of the loan are clear and enforceable.