Mortgages
The mortgage is the public notice of the lender's interest or lien on the property. While the note creates the legal obligation on the part of the borrower to pay back the money with interest, the mortgage makes the loan public. This is done so the buyer of a property knows if there are any encumbrances or liens that would prevent a clear title to the real estate. When a borrower receives money to purchase a home, two documents are signed: the promissory note, which you've just seen, and the mortgage.
The mortgage alerts the public — anyone who looks at the property records in the county courthouse — that a loan exists and the lender has an active interest in the property. It prevents the property from being transferred without the mortgage first being satisfied.
