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Your Mortgage Isn't Your Loan. So, What Is It Then?

For many people, the terms “mortgage” and “home loan” may be interchangeable. But they have two different meanings.

“The home loan is what we call the promissory note, or actually just the note,” said Kevin Ramirez, senior vice president of sales training at New American Funding. “It's the contract that you signed that says I promise to pay this home loan back.”

Essentially, it's the borrower's commitment to pay back the lender.

Meanwhile, the mortgage is a separate document that pledges the property as security for the home loan. It creates a lien on the property, giving the lender a legal claim until the loan is fully repaid.

This arrangement provides security for both the borrower and the lender. Through these documents, the lender has assurance that the loan will be repaid, and the borrower can access the funds they need to purchase the home.

Kevin Ramirez NMLS # 104026