What is a promissory note?

A promissory note is fundamentally a financial document that serves as a written promise from the borrower to repay the loan according to the specified terms. It outlines the amount borrowed, the repayment schedule, interest rates, and other conditions associated with the loan. This legal instrument is crucial in lending as it ensures that both parties (the lender and the borrower) understand their obligations. The promissory note provides the lender with a way to enforce repayment if the borrower defaults, as it is a legally binding agreement.

The other options pertain to different aspects of real estate and lending practices but do not accurately describe what a promissory note is. For instance, stating the property's market value relates to an appraisal, while title history focuses on ownership and claims on the property. A list of fees associated with a loan refers to the closing costs or fees that a borrower might incur, which are separate from the actual promise to repay the loan as documented in a promissory note.