we notarize everything like that means anything.and Hey i am going to send you a picture of me holding my ID  like that means anything. then of course the reason they can do this is a you buy an insurance policy that will pay the lender if you fail to pay them.well of course we know this does not exist other than on fannie freddie or VA loans.. so they hit you with another 2 to 5k for this bogus does not exist insurance.. they =know all the strings to pull that suck people in.. all the objections and things that those not familar with borrowing money would think well hey thats cool cant be a scam  :)

What is the right place to get it notarized?

MOST IMPORTANT:  Have your attorney prepare proper disclaimers and informed consent documents to be signed by the seller and notarized. 

If not, are you sure you will be getting 6% int rate?

To be fair to your friend, you should sign a proper Promissory Note documenting his loan to you (your signature notarized)  and after you purchase the property with conventional bank financing (since you will have Title in your name), your friend may want to have his 2nd position Lien (Warranty Deed) recorded on the property - but that is up to you.  

This may sound silly and cumbersome as a sincere suggestion, but might it end the controversy to simply "reset" the original deal by temporarily deeding the house back to the seller and having it recorded, while holding a subsequent deed from them back to you, notarized and official, but with deferral on your recording of it?

I am thinking I need to have a simple loan agreement drawn up by a lawyer, signed and notarized and then have a title company file the lien.

They are now being signed and notarized and will be filed with the county at the same time the deed is signed by both heirs, and the costs below will be subtracted from the purchase price.Total attorney costs: $200Expected Filing costs: $350I am pretty pleased how this has worked out.  

Most lenders are now asking that Arms Length Transaction Affidavits are signed and notarized by all parties (including RE agents etc).

@Jason Clemens,You need them notarized, not just signed in front of you.