Types of Promissory Notes
Commonly, a promissory note is referred to as “the note” and we shall do the same here as we study the basic types of notes in use as evidence of a debt. A promissory note may stand aloe as an unsecured loan or note, or may be secured by either a trust deed or a mortgage. The promissory note, however, is the prime instrument , and if there are conflicts in the terms of the note and trust deed or mortgage, generally the terms of the note are controlling.
There are several types of promissory notes, each with a different kind of obligation made clear by the terms of the note. Some promissory notes have a fixed interest rate, where the interest rate and terms do not change over the life of the loan. Other may include a movable interest rate as well as changes in the payment over the life of the loan.
Here is a list of types of promissory notes:
· Fully Amortized Note
· Partially Amortized Installment Note
· Straight Note
· Adjustable Rate Mortgage Note
· Hybrid Note
A popular California home loan since 2000, the adjustable rate mortgage note has allowed home buyers to purchase larger properties because of the lower interest rates of adjustable rate mortgages. These lower rates gave home buyers a loan that would make their dollar stretch farther. However these loans have risk and is important to understand that.
Kevin O’Connor
Mortgage Consultant
www.koloans.com
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