subject: Buying A Home - Learn How Important Your Closing Documents Are [print this page] As you finalize the closing of your purchase, the first set of documents you'll need to address are the loan documents. Before you sign, make sure all numbers and figures are correct-especially the number of zeros. Some of the major documents you'll encounter include:
1) Mortgage Or Deed Of Trust-With this document, you're granting the lender the right to place a lien on your home as security for the loan. If you should fail to pay or default on the promissory note, the bank can seek restitution by foreclosing on your property. This document will be recorded at the proper local government office.
2) Promissory Note-This document states how much you're borrowing and that you'll personally guarantee to repay the note.
3) UCC-1 Financing Statements (Applies To Co-Ops)-Since there's no home loan with co-op financing, your bank may elect to complete and submit this document for recording to secure it's claim on your property.
4) Monthly Payment Letter-This states how much you'll pay in principal and interest on the loan. This amount can also include payments for property taxes and or insurance such as homeowners or private mortgage insurance (PMI).
5) Closing Statement, Settlement Sheet, Or HUD-1 Settlement Statement-This form is completed by your closing agent using a HUD-1 form. It lists all payments required to be made by you and the seller for the home and other expenses associated with the transaction such as insurance premiums, satisfying outstanding liens, and more. The seller is also required to sign this form. After your transaction is closed, make sure to verify if your closing agent attached a refund check for any extra money you deposited in the beginning.
6) Truth-In-Lending (TIL) Disclosure Statement (Regulation Z Form)-Usually within 3 days after submitting your loan application, you'll be given a preliminary draft of this form. It breaks down all your monthly payments associated with the loan. You'll find the interest rate, APR or annual percentage rate, and your total payments over the life of the loan.
After your financing is settled, you'll need to focus your attention on the paperwork that actually transfers the property to you. The list below comprises the basic essential documents. Depending on where you live, there could be more:
1) Deed (Warranty deed)- The seller will have to sign this document transferring title of the property to you.
2) Bill Of Sale-This paper spells out any personal property transferred from the seller over to you.
3) Stock certificates And Proprietary Lease-This only applies to Co-op homebuyers.
4) Affidavit Of Title And ALTA Statements-This statement indicates the seller isn't aware of any defects that may cloud the property's title.
Once everything is signed, you'll be handed copies for your records. Be sure to keep them in a safe place for future reference.
