The Note and the Mortgage: What Every NYC Buyer Should Know Before Closing

For many New Yorkers, buying a home—whether a condo, co-op, or townhome—comes with the need to secure financing. If you’re working with a lender, you’ll be signing two key documents at closing: the Note and the Mortgage. Understanding what these documents are (and what they aren’t) can make you a more informed—and confident—buyer.

The Note is your promise to repay the loan. It lays out the amount borrowed, interest rate, term of the loan, and monthly payment schedule. Most conventional loans in NYC follow Fannie Mae guidelines and use a standard format, but that doesn’t mean you should gloss over the details. Look closely: Is there a grace period for late payments? Are there prepayment penalties or adjustable-rate features? How is interest calculated—daily or monthly? The Note may also include riders for condos, co-ops, or second homes that can impact your rights and responsibilities, especially if you plan to rent out the property or renovate.

The Mortgage is the legal document that secures the lender’s interest in the property. If you default, it allows the lender to foreclose. In New York, this gets recorded against the deed for a condo or townhome—or secured via a UCC-1 financing statement for a co-op. One important clause to look out for is the acceleration clause, which gives the lender the right to demand full repayment if you miss payments or violate other terms, like failing to maintain insurance or making unauthorized use of the property.

Fannie Mae loans typically don’t include prepayment penalties, but it’s still wise to confirm. Also, watch for late fee provisions—most loans allow a short grace period, but fees can add up quickly if you’re not careful. In addition to your base loan payments, you may also be required to escrow for taxes, insurance, or common charges depending on your lender and building.

While your attorney will walk you through these documents at closing, it helps to know what to expect. A bit of knowledge up front can prevent confusion—and save you time and money—down the line.

Have questions or want to learn more? Reach out to CPL—our team is here to guide you every step of the way.