What financial document outlines the terms of a mortgage?

The promissory note is the financial document that outlines the terms of a mortgage. It is essentially a legal agreement wherein the borrower agrees to repay the lender the borrowed sum, typically with interest, under specified conditions. Key components of a promissory note include the loan amount, the interest rate, the repayment schedule, and any penalties for late payments. This document serves as a promise from the borrower to the lender to fulfill their obligation, making it a fundamental instrument in the mortgage process.

While other documents like the deed of trust, closing disclosure, and loan estimate play important roles in the mortgage process, they serve different purposes. The deed of trust secures the loan by establishing the lien on the property, the closing disclosure provides a detailed account of the final terms of the mortgage and associated costs, and the loan estimate outlines initial loan terms and projected costs. However, none of these documents serve the primary function of detailing the borrower's promise to repay the loan, which is the essential role of the promissory note.