Finally – you’re at the point of preparing to close on a home that you probably spent a long time searching for. From the point of offer acceptance to closing, however, there is still plenty to be done in order to ensure a successful transaction.
You’ve probably already put your autograph on a variety of documents before escrow began, but don’t put that pen down just yet. There are still several documents that need your review and signature at closing.
Here are the documents that you will most likely have to sign, and what you should be looking for when you read through them.
Note For Your Mortgage
You will need to provide in-depth, detailed proof of your exact debt to your lender through a “note,” which describes the loan terms and how the lender will be able to transfer or collect this debt. It’s basically your written promise that you will pay back the loaned amount plus interest and other fees by a specific date, and will detail how long you will have to make good on this promise.
By signing the mortgage document, you are essentially agreeing to use the house you just purchased as collateral for the mortgage. That means if you default on your mortgage and are unable to repay it, the lender has the right to repossess the home and sell it as a foreclosure in order to recoup the loan amount provided to you. The mortgage is recorded and becomes a lien on the property, which means your lender owns an interest in the property up to the outstanding loan amount.
The original mortgage application that you filled out and signed when you first applied for the home loan will be printed out again for you to look over. If anything has changed since you originally filled out the form – such as a change in job or income amount – this is the time to let your lender know so that the changes can be made.
Loan Estimate and Closing Disclosure
Just over a year ago, the HUD-1 Settlement Statement, Good Faith Estimate, and Truth-in-Lending disclosure that used to be part of the mortgage closing process were replaced with the Loan Estimate and Closing Disclosure. These new forms were introduced to give borrowers easier-to-understand terms and enough time to review the documents before signing them. They were also designed to be more transparent about important aspects of the mortgage, such as the term, rate, and dates.
This document essentially transfers the property over to you from the seller. While you can choose to take title individually, there are other choices in terms of the form of ownership, including joint tenancy or in trust. The deed will then be made public after it’s handed over to the county recorder. By making it public, everyone will be able to see that you are the rightful owner of the property.
Bill of Sale
If the seller agreed to leave certain items in the home along with the house, they will all be detailed in the bill of sale. Whether it’s the appliances, furniture, electronics, window treatments, or anything else, they will be legally transferred to you through this document.
Documentary Transfer Tax
This document allows a county or municipality to charge a tax on the transfer of the property from the seller to you. Both parties must sign declarations that stipulate the purchase price and the tax calculation.
Main Title Document
The title company and escrow company will want you to sign forms of their own, including the main title document. This is the title insurance commitment that lists the party that owns and has title on the property, which ideally would be the seller.
Any liens or other issues on title will also be listed. If there are any problems, now’s the time to have them rectified before closing so that you receive free and clear title of the home as promised in the purchase contract. If the title needs amending, the seller will have to do what’s necessary, such as paying off liens. If there are problems with the title, it could delay closing.
The Bottom Line
This list may seem quite daunting, but you’ll have plenty of guidance thanks to your real estate professional and mortgage specialist who will shed light on anything that you may find confusing. These are all standard forms, and aren’t anything to fret about. After you’ve completed and signed all of these documents, you’ll be handed the keys to your new home for you to enjoy!