Rhode Island Mortgage Law Practice Test

The loan agreement or note is the correct document that outlines the terms and conditions of a mortgage loan. This document serves as a legal contract between the borrower and the lender, detailing crucial elements such as the loan amount, interest rate, repayment schedule, and any applicable fees or penalties. It is essential because it clearly defines the responsibilities of both parties and sets the framework for how the loan should be repaid.

In contrast, a deed of trust is a different legal instrument that involves a third party, typically a trustee, and serves to secure the loan against the property. The appraisal report assesses the property's value but does not address loan terms. The title insurance policy protects against financial loss from defects in title but does not contain any loan conditions. Therefore, the loan agreement or note is the fundamental document that specifies the borrower’s obligations and the lender’s rights regarding the mortgage.