Yes, the lawyers advised you correctly. As to the wording, it's not a mortgage. It sounds like a personal loan for which the security is the person's house. It would be second in terms of priority as to the original mortgage loan (I say this assuming that there aren't other liens or loans on the house already).
Yes, a promissory note and a deed of trust would work. Those can be found online or at most stationary stores. The deed of trust would then have to be recorded against the property.
To make sure that you do it right, I would have a lawyer review it.Ask a similar question