Which statement best describes the relationship between a promissory note and a mortgage?

• A. The promissory note evidences the loan obligation, while the mortgage provides security for the loan with the property
• B. The mortgage evidences the loan obligation; the promissory note secures the loan
• C. They are the same document
• D. The promissory note is only for investment loans

Answer: (A)

The main idea is understanding how debt and collateral relate in a real estate loan. A promissory note is the borrower’s written promise to repay a specific amount under agreed terms—it's the record of the debt itself. A mortgage, on the other hand, is the security instrument that ties that debt to the property; it creates a lien on the real estate so the lender has a claim if the borrower defaults.

So, the note establishes how much to repay and the schedule, while the mortgage provides the lender with a legal right to seize or foreclose on the property to recover the loan if payment stops. They are separate documents with different roles, typically connected but not interchangeable. The other statements mix up which document creates the debt and which provides security, or claim they are the same document, or limit the promissory note to certain loan types.