What is the relationship between a promissory note and a mortgage?

• A. The promissory note is borrower’s promise to repay; the mortgage secures that promise with a lien on the property.
• B. The mortgage is the promise to repay; the promissory note secures the loan with a lien.
• C. The promissory note is a deed to the property.
• D. The mortgage and promissory note are unrelated.

Answer: (B)

The key idea here is the debt versus the security for that debt. The promissory note is the borrower's promise to repay the loan—it states how much is borrowed, the interest, and the repayment terms. It creates the personal obligation between borrower and lender. The mortgage, on the other hand, is the security instrument that encumbers the property to protect that promise; it creates a lien on the real estate so the lender has a way to enforce repayment, typically by foreclosure if the note isn’t paid. The mortgage does not promise to repay—the note does. Without the note there would be no debt to secure, and without the mortgage the lender has no collateral to foreclose on.