What form of property documentation is essential for confirming prepayment penalties?

The promissory note is the essential form of property documentation for confirming prepayment penalties because it is the primary instrument that outlines the terms of the loan agreement between the borrower and the lender. This document specifies the borrower's obligation to repay the loan and can include important conditions such as interest rates, loan amounts, payment schedules, and also any penalties associated with prepaying the loan ahead of schedule.

Understanding these terms is crucial for borrowers as they can impact the overall cost of the loan if they decide to pay it off early. The promissory note legally binds both parties to these terms, providing clarity on what the borrower can expect should they choose to refinance or pay off their mortgage before the term officially ends.

In contrast, a credit report assesses an individual's creditworthiness and provides insight into their past financial behavior, but does not detail loan terms. A title search ensures that the property’s title is clear of any liens or claims, while a property appraisal determines the market value of the property, aspects that do not contain specifics about the loan's penalties for early payment.