Check Your Understanding Answers
- Define leverage.
Leverage is usually described as making use of other people’s money, such as making a low down payment and borrowing the rest of the money for a home purchase.
- What document is a real estate promissory note attached to?
Either a mortgage or a deed of trust
- List three provisions that are common to most notes. (See other correct answers on page 5.)
Amount borrowed – This is the face amount of the note that is advanced when the note is executed.
Interest rate – The rate can be either fixed or adjustable. If it’s adjustable, the note should specify how the rate will change.
Amount of payments – The amount of the payments will be determined by the face amount of the loan, the length of the loan, and the interest rate.
- What does the covenant of seisin provision of a mortgage document state?
The covenant of seisin provision states that the mortgagors actually have title to the property and therefore have the authority to pledge it as collateral.
