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STEP 9

OVERVIEW

On the day of closing, all parties will sign the appropriate documents so that ownership of the home will be transferred to you. If you have any last minute changes you’ll want to handle that before anything is signed. Most contracts will allow you to walk through the property the day before closing to make sure everything is in its expected condition. If anything is out of order, you can ask to delay the closing or request for an additional escrow deposit to cover necessary repairs.

Closing Forms

Mortgages are complex transactions that many consumers don’t fully understand, even at the point of closing the loan. Understanding your closing statements, forms, and disclosures is an important part of responsible home ownership.

The HUD-1 Settlement Statement

The HUD-1 is a key document that lists all of the costs and credits with regard to your home purchase (or refinance) transaction. It is important to review this document carefully in order to ensure that you are receiving the loan you agreed to. Make sure to compare this document to your Good Faith Estimate (GFE) you received at application. If something is different from what you agreed upon, contact your lender right away.

The Promissory Note

Simply put, when you sign the Note you agree to repay your mortgage. The Note will provide you with the details of your loan, your mortgage interest rate, your payment schedule, the length of time for repayment, and the place where you will send your payment. The Note also explains the consequences of failing to make your monthly mortgage payments. Read this document carefully. If something is different from what you agreed upon, contact your lender right away.

Right to Cancel Form

If you are refinancing a loan, you have a right to cancel the loan within three business days. This document explains the rules for when and how you can cancel your loan, and what happens if decide to make this decision.

Truth in Lending Disclosure

This document summarizes the terms and conditions of your mortgage. You should review these terms carefully to make sure that you are getting the loan you signed up for. The numbers and features should match the Truth in Lending disclosure that you received when you applied for your mortgage. If the numbers are different, ask your lender why.

Initial Escrow Disclosure

The Initial Escrow Disclosure Statement details the specific charges that you will pay into escrow each month as part of a mortgage agreement. It shows how your escrow money will be spent and includes your monthly escrow payment, any disbursements (withdrawals) to pay taxes and insurance bills, and the running balance held in the account. Remember that the escrow amounts could change over time.

Deed of Trust / Mortgage

This document may be called the Security Instrument, Deed of Trust, or Mortgage. When you sign this document, you are giving the lender the right to take your property by foreclosure if you fail to pay your mortgage according to the terms you’ve agreed to. This document restates the basic information included in the Promissory Note, as well as explains your responsibilities and rights as a borrower. The mortgagee refers to the lender or the “recipient of the mortgage.”