A promissory note is the main document to lay out all the terms, conditions, and payment information for the borrower to sign. It is a legally binding promise made by the borrower that they will repay the loan under the said conditions of the promissory note.
Parts of the promissory note:
- Amount received
- Payment of principal
- Interest
- Prepayment, if any penalties apply
For larger loan amounts, consider preparing a mortgage that gives the lender an interest in the property you are purchasing. The property can act as collateral in case of an adverse payment default. In addition, it provide a peace of mind to the lender knowing that their money is tie to something of collateral value.
An escrow company will be able prepare the mortgage (normal trust deed), then have it filed with the County Clerk / Office of the City Register.
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