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 modified accrual method is defined as an alternative accounting method that combines the two basic methods of accounting, the accrual method and the cash method. While the accrual ...
The tenant is forced to leave the premises if he complains about the poor condition of the apartment or office space he has leased. This type of eviction is illegal in many states. ...
Person serving as a property administrator for someone who is incompetent due to a mental or physical deficiency. ...
An asset. The term cost is often used when referring to the valuation of acquired property. When it is used in this sense, a cost is an asset. Concepts of cost and expense are often ...
Government compensation to farmers not to grow products to preserve the land and maintain stable agricultural products. ...
Edifice constructed on the to floor of a building usually occupying less than 1/2 the roof area. A penthouse is used for two purposes; one or more luxury apartments directly accessed by a ...
Organization dedicated to creating and furnishing the most timely and effective advice and direction for the professional management and financing of facilities and services for ...
Home of 1 to 3 stories with stucco outside and a roof made of red tiles. ...
Same as term prospectus: Document that must accompany a new issue of securities for a real estate company or partnership. It includes the same information in the registration statement, ...
Have a question or comment?
We're here to help.