Which document typically outlines the responsibilities of the lender and borrower in residential transactions?

Prepare for the Maryland Title Insurance Test with targeted multiple-choice questions, including hints and explanations for each to help you succeed. Get ready to ace your exam!

The promissory note is the document that typically outlines the responsibilities of the lender and borrower in residential transactions. This legally binding document establishes the borrower's promise to repay a loan under specified terms, including the amount borrowed, the interest rate, and the repayment schedule. It details the obligations of the borrower to make payments and the lender’s rights in the case of default.

While other documents, such as the mortgage and deed of trust, play critical roles in real estate transactions, they focus more on securing the loan rather than detailing the specific obligations regarding the repayment terms. The mortgage serves to create a lien on the property as collateral for the loan, and the deed of trust involves a third party holding the title until the loan is paid off, but neither directly addresses the repayment commitments of the borrower. The closing disclosure, while important for providing a summary of the closing costs and loan terms to the borrower, does not serve the purpose of outlining responsibilities in the same way a promissory note does.

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