If you’re in the process of buying a home, you’ll soon come across a stack of documents that require your signature before the sale is complete. These documents are known as mortgage closing documents, and they serve to finalize the terms of your home loan and the transfer of ownership.
While the stack of paperwork may seem overwhelming, it’s essential to read and understand each document before signing. In this guide, we’ll walk you through some of the most important mortgage closing documents you’ll encounter during the homebuying process.
Closing Disclosure (CD)
The Closing Disclosure is a five-page document that outlines all of the final details of your mortgage loan. It includes the loan terms, interest rate, monthly payments, closing costs, and any other fees associated with the loan. The CD is typically provided to you three days before the closing date so you can review the terms and make sure they match the Loan Estimate you received earlier in the process.
Promissory Note
The Promissory Note is a legal document that outlines the terms of the loan, including the amount borrowed, the interest rate, and the repayment schedule. It also includes any penalties for missed payments or early repayment. By signing the Promissory Note, you agree to repay the loan according to the terms outlined in the document.
Mortgage Deed (or Deed of Trust)
The Mortgage Deed, also known as a Deed of Trust, is a legal document that gives the lender a security interest in the property until the loan is repaid in full. It outlines the terms of the loan, including the amount borrowed, the interest rate, and the repayment schedule. It also includes a legal description of the property being financed and the names of the parties involved.
Bill of Sale
The Bill of Sale is a legal document that transfers ownership of personal property from the seller to the buyer. In the case of a home purchase, this typically includes any appliances or other personal property that were included in the sale.
Closing Affidavit
The Closing Affidavit is a legal document that certifies that all of the information provided in the loan application is true and accurate to the best of the borrower’s knowledge. It also confirms that the borrower has not taken on any additional debt since the loan application was submitted.
Title Documents
Title Documents are legal documents that confirm the seller’s legal ownership of the property and provide information about any liens or encumbrances on the property. The title company will conduct a title search to ensure that the property can be legally transferred to the buyer.
Homeowners Insurance Documents
Before the loan can be closed, you’ll need to provide proof of homeowners insurance. This typically includes the insurance policy and proof of payment for the first year of coverage.
In conclusion, mortgage closing documents can be overwhelming, but it’s important to understand what you’re signing. If you have any questions about the documents or the terms of your loan, don’t hesitate to ask your lender or real estate agent. By understanding the mortgage closing process and the documents involved, you’ll be better prepared to complete your home purchase and move into your new home.