A lender is able to foreclose on your property because you borrowed money and made a promise to repay.

Your promise to pay is contained in a promissory note. This note is your unconditional written promise to pay the lender a sum of money with interest by a certain date.

Your promise was secured by your home. The lender got its security interest by either a Deed of Trust or a Mortgage. If you fail to live up to your promise, the lender gets the house.

Most borrowers are unaware of the terms of their promissory note. Now might be a good time to look at the note you signed and determine exactly what you committed yourself to.

If you plan to re-negotiate one or more of the terms of the note, familiarizing yourself with those terms is crucial. When examining the promissory note, ask yourself these questions.

• How much did I borrow?
• Who did I promise to pay?
• What is the original interest rate?
• What is the original monthly payment?
• Is the interest rate adjustable?
• If the rate is adjustable, when will it change?
• What is the payment schedule?
• What is the security? (Deed of Trust or Mortgage?)
• What are the prepayment terms?
• What are the consequences of default?