Straight Note
Definition of "Straight note"
The term straight note in real estate is also known as a promissory note. A straight note is defined as a loan agreement that generally requires payments of interest only over the term of the note. At the end of the term, the entire debt balance becomes payable in a single balloon payment. However, a straight note can also only require one payment that includes the amount of its principle to which the accrued interest is added that is also paid at the end of the loan in one balloon payment.
While other types of installment notes require monthly principal payments, a straight note can only demand interest payments. The principal payment is only covered at the end of the loan.
What is a Straight Note in Real Estate?
In real estate transactions, a straight note can also be referred to as a sleeper trust deed because interest usually accrues unpaid and is only required with the lump sum payment of the principal. However, if the principal is not required for a year or two, periodic accruing interest may be demanded during the term of a straight note.
A straight note in real estate isn’t a common loan because purchasing loans like mortgages are for much more extended periods of time. The most common reason to use straight notes in real estate is for short-term debt by lenders or carryback sellers. Another instance when the straight note is used in real estate is for evidence of short-term real estate commitments. For example, if someone wants to purchase a property, but the funds necessary for the closing might take a while to be granted, a straight note works as a bridge loan. The buyer will use the straight note to demonstrate a real estate obligation until the mortgage is granted.
Popular Real Estate Terms
The real estate market uses the absorption rate to assess at which rate are available homes sold. This evaluation method is used for specific markets for specific periods of time. To ...
A floor where the binding joists support the common joists above and the ceiling below. ...
Interest rate on an adjustable rate mortgage based on the total of the current value of an index and margin applicable to the mortgage. The rate is the basis for the computation of monthly ...
In real estate, Attractive Nuisance is how insurance companies classify something that is inherently dangerous and particularly enticing to children. A hazard located within a property that ...
Span of time a rental agreement is free to the occupant. A landlord may offer this as an incentive to stimulate rentals. For example, an owner of an office building may provide a free ...
The definition of a homeowner’s fee is a fee that is charged to homeowners that belong to a homeowner's association. The homeowner’s fee usually includes the cost of ...
An early term used to describe all types of real estate property, improvements to the land, and all rights accruing to the land. ...
(1) Flooring in a structure. (2) Open structure with flooring erected outside a main building. A deck can have different levels with direct access to the main structure. It is usually ...
Space that is available to all tenants or owners, such as a courtyard, main entrance, elevator, and pool. ...
Have a question or comment?
We're here to help.