Ace the Hawaii Pre-Licensing Exam 2025 – Surf Your Way to Real Estate Success!

The statement that the mortgage note legally binds the borrower to repay the loan as agreed is accurate and reflects the fundamental nature of a mortgage note. A mortgage note is a legal document that outlines the terms of the loan, including the amount borrowed, the interest rate, the repayment schedule, and other relevant conditions. By signing this document, the borrower acknowledges their obligation to repay the loan according to the specified terms. This makes the note a crucial instrument in the lending process, ensuring that both parties have a clear understanding of their commitments.

The other statements do not accurately describe the role of a mortgage note. The note does not serve as a receipt for property taxes paid, nor does it directly provide protection to the lender from foreclosure. Additionally, it does not allow property to be used as collateral without a loan, as the collateral arrangement is typically outlined in the mortgage deed, which complements the mortgage note.