Massachusetts Home Buyer Guide

After the lender's real estate attorney, also known as the closing attorney, explains at closing to the homebuyer that by signing the "note" he or she is promising to pay the loan amount back, homebuyers are sometimes surprised when the attorney then presents the mortgage document to be signed.

The confusion arises because when a homebuyer gets a home loan through a lender it is often referred to as "getting a mortgage." That's not incorrect, but it's also not precise language. The real estate note is the contract between the borrower and the lender. The lender agrees to lend money under specific conditions, such as interest rate and length of time to repay, and the borrower agrees to pay the money back.

So what's the mortgage? A mortgage is the actual legal document by which real estate is pledged as security for the repayment of a loan. In other words, the note is secured by the mortgage. The mortgage is a document that gives a lender in Massachusetts the statutory right to foreclose on the home the borrower used as collateral, if the homeowner/borrower fails to pay back the money lent under the terms and conditions set out in the note.  

It's the homebuyer/borrower that gives the lender a mortgage. The lender gives the borrower the loan. For example, if a married couple will both be on the title to the property, but only one spouse is receiving the home loan, the other spouse must still sign the mortgage, so the lender is able to foreclose on both of them in the event that the borrowing spouse fails to repay the loan. 

A loan to purchase real estate sometimes is referred to as a "mortgage loan." In fact a search of the word mortgage on the Internet will result in various definitions referring to it as a type of loan used to purchase real estate.

As a homebuyer, you should not get too caught up in the real estate jargon or legalese, but just understand that both documents are required and each have a specific purpose.