If you’re buying a house anytime soon, it pays to start exercising your writing hand now. You will sign your name dozens and dozens of time during closing.
While we joke about the exercise plan, we are serious when we say your closing will entail miles of paperwork and tons of signature. Before you get there, you need to be ready for it. Whether you are approved for any type of loan from a HomePath mortgage or a VA loan to a conventional loan, be prepared to see a lot of documents.
Once you’ve decided on a loan type, gotten a mortgage loan, and completed the inspection, it’s time to close. These are some of the documents that you will be presented with and signing. (Keep in mind these may vary slightly depending on the state you live in.)
Mortgage Note
This document lays out the details of your mortgage loan such as the length of the loan, interest, and terms. Signing it means you are agreeing to pay the money back at the amount and in the time that’s specified.
Mortgage
Also referred to as the “Deed of Trust” this document gives the mortgage company the right to foreclose if you don’t keep up your end of the agreement and pay as laid out in the mortgage note.
Deed
The deed transfers ownership of the property from the seller to you.
Closing Disclosure
Your mortgage lender should give you this paperwork before the actual closing, so that you have time to read it thoroughly. It itemizes details of what you will be expected to pay at closing, such as the down payment and any closing costs.
Escrow Disclosure
When you have a mortgage, you usually pay your home’s insurance and taxes as part of the monthly payment. These funds go into an escrow. This document explains this in detail and lists the amount of money you will initially be paying in your monthly payment that is earmarked for escrow.
Property Tax Statement
This document states the property taxes that will be required by the buyer. If the seller has already paid some of the current year’s taxes, the buyer may need to reimburse these funds.
Proof of Occupancy
This is also called a “Certificate of Occupancy” and states the property has met local building codes and is inhabitable. This typically applies to newly constructed homes.
Homeowner’s Insurance Proof
You will most likely be required to carry homeowner’s insurance as long as you have the mortgage. As mentioned above, the payments will be held in escrow and paid on your behalf. You will sign this document agreeing to carry insurance.
Title Insurance Document
Depending on the state, title insurance may be optional or required. Title insurance protects you as the buyer if the title is ever disputed.
Familiarizing yourself with these documents and understanding what is expected of you makes it less stressful when you come to the closing table. By being aware of these documents and what each of them entail, you won’t be overwhelmed by the volume of paperwork you see.
