If you buy a house, you must know that a mountain of paperwork is involved. One of the many important forms that you must assess and sign is the Promesse.
De Promesse, essentially the promise of a borrower to repay a loan, makes your agreement with the mortgage provider legally binding. You can consider it a IOU who stands in court. If you do not adhere to the payment agreement described in the Promesse, you can lose your house to shielding.
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In real estate, a Promesse is a legally binding document that outlines certain details of your housing loan. This document, usually two to three pages long, specifies what you owe the lender, including the main sum of the mortgage, interest rate, repayment schedule and the expiry date.
The Promesse also states that your property is collateral for the loan until the full debt has been paid, and it determines any fines for missed payments. In other words, the lender can close your house if you do not make your payments as agreed.
When it is time to close your house, you must have your closing disclosure, the mortgage (also called the deed of trust) and the Promesse. Depending on the requirements in your state, you may need a notary when signing these documents.
After you have signed, the lender usually keeps the original document and give a copy. From that moment on, the Promesse will remain in force until you pay off the loan or refinance your mortgage. As soon as you fully refinance or reimburse the mortgage loan, the lender will send you a final statement that shows that your account balance is now $ 0.
The laws about what needs to be included in a Promesse vary per state, but you can expect to find the full details of your payment agreement in this document. This is what the lender will usually take up:
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Loan amount
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Interest rate
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Total amount you pay
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Payment schedule
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How payments will change over time (if applicable)
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Duration to repay the loan
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Where you have to send your payments
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Late costs and fines
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The names and addresses of borrowers and lender
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The signatures of the borrower and the lender
Read more: What is a house deed?
When it comes to buying a house, promising can be sorted in two types, with one type being found much more often:
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Secure Promesse comment: The Promesse is protected by using your house as collateral. So if you do not make monthly mortgage payments, the lender can protect the property. The shielding process usually does not start until you miss a few consecutive payments.
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Unspreciated Promesse comment: The memorandum is not supported by the house as collateral, so running on payments does not endanger you to lose ownership. This kind of promising is common for personal loans and student loans, but not for mortgages.
More information: Close a house – what to expect and how to prepare
A promotion and a mortgage are not the same. Both are legal documents used to complete your purchase of home, and each contains information about your loan payments, but the mortgage connects the property to the loan as collateral.
The money lender can sell your Promesse. If this happens, your payments will remain the same, but you may have to send them to another company, also known as a manager. It is relatively common for lenders to sell mortgages and Promesse notes to serviceers after closing.
No – It is considered predatory and unethical for a lender to ask you to sign a promesse before your loan has been approved. If a mortgage provider asks you to do this, they may be able to lose their credit permit.
This article has been edited by Laura Grace Tarpley.
