Which document provides the exact terms of a financial obligation involved in a mortgage?

The promissory note is the document that outlines the specific terms of a financial obligation involved in a mortgage. This legally binding contract details the borrower's promise to repay the loan, including the loan amount, interest rate, repayment schedule, and penalties for late payments. It's crucial because it serves as the borrower's formal commitment to the lender and establishes the legal basis for the loan.

In contrast, the mortgage deed serves to secure the loan by placing a lien on the property, ensuring that the lender has a legal claim to the property if the borrower defaults. The loan application, while important for assessing the borrower's creditworthiness, does not specify the terms of the financial obligation itself. The appraisal report provides an assessment of the property's value but does not contain details about the terms of any financial agreement. Understanding the purpose of the promissory note is fundamental for grasping how mortgages and financial obligations function in real estate transactions.