and like most everybody else,

it takes a loan to have that part of the American dream.

When you're getting down to the nitty-gritty of the loan process,

you'll be signing a whole lot of papers.

But what are all these parchments you're scribbling on?

Well, each and every one is a legally binding document

with legal consequences.

And two of those documents are more important

than any of the others--

the note and the mortgage.

The note, which is also called a promissory note,

is really just a fancy IOU.

The note says you owe the bank

and that you're going to pay them back over time

while also detailing how much time you have to pay them back

and what the interest rate is.

Not only that, the note will also contain information

on how you and the bank can contact one another.

Now, the mortgage is something a little different.

A mortgage is a lien against your home

to guarantee the payment of the note.

It follows the note around like a faithful sidekick.

The mortgage is what gives the bank the right

to foreclose on your home if you do not pay back the note.

Like the note, the mortgage will also consist of additional information

such as how the bank must notify you regarding nonpayment

and any additional money you may owe the bank for taxes

and insurance.

The mortgage is what gets filed or recorded in official county records,

so that others can see if a lender has some rights

to the value of the house--

sort of like first dibs

on any money that would come from selling the house.

Everything comes to a head appropriately at the closing

of the contract on the house.

Here, the buyer and seller will meet

along with the appropriate bank agents and representatives.

The seller will sign over the deed of the house to the buyers

and they in turn will sign the note and the mortgage

along with any other loan papers.

The language in these documents is generally considered non-negotiable

from the bank's point of view.

Double check all the numbers and information.

Have the closing agent explain whatever isn't clear

if need be.

If the terms in the loan papers are different from what you agreed on,

do not sign.

In those cases, and because of the fixed nature

of the closing documents,

you don't have much choice other than walking away

at that moment to refigure things out.

For help in understanding all of these documents

and any other loan issues, turn to LegalYou.

LegalYou, you can do this.