At your closing, the closer will be presenting you with many closing documents to review and sign, especially if you are getting a loan. While this stack of paperwork can seem overwhelming at first, it is important to keep in mind that most of what you want to know about your transaction will be contained in just a few of the closing documents. The remaining documents are forms needed as part of your lender’s and title company’s process.
Within these closing documents are your individual loan terms, payment information and breakdown of the money in your transaction, including fees and payoffs being made on your behalf. You should have already been provided with an initial closing disclosure, as required by law, three days ahead of your closing date. This initial closing disclosure provides you with your loan amount and terms, your anticipated monthly payment and fees associated with your transaction. Because of this, the documents presented to you at the closing should not contain any surprises or terms different from the initial closing disclosure.
You’ll want to review the following:
• Your Monthly Payment, as it will break down what you must pay each month. Your monthly payment may cover more costs than just the
loan repayment, such as escrows for taxes and homeowners insurance.
• Your Note, as it contains all of the terms of your loan and is your legal agreement to repay your loan.
• The Closing Disclosure or Settlement Statement, which is a complete breakdown of all the money involved in your transaction, identifying
who is being paid and how much.
• The Security Instrument, usually called a Mortgage or Deed of Trust, which is the document that shows your home is being used as
collateral for the loan and is the legal document that creates the lender’s lien against your home until the loan is repaid in full.
• If your transaction is a refinance of your primary residence, you will also have a Right of Rescission form that provides you with three days
after the closing to change your mind about completing the loan transaction.
Becoming familiar with some or all of these forms ahead of the time may help the closing go more quickly, but is not mandatory because the closer will be ready to explain the documents and answer any questions you have during the process.