A promissory note is basically an IOU that contains the promise to repay the loan, as well as the terms for repayment. 1  term (number of years).  Unlike a mortgage or deed of trust, the promissory note is not recorded in the county land records. The lender holds the promissory note while the loan is outstanding. When the loan is fully paid off, the note will be marked as paid in full and returned to the borrower.