When you purchase a home, there are two closings, one to move the title on the deed and the moment to sign files for your mortgage loan. Deed and ownership transfers are generally subject to local, municipal, county or state laws. Mortgage loan records are predominantly covered with U.S. laws. Be prepared to sign many documents to complete your purchase and agree to a mortgage loan when you get a home.
Deed Transfer
Moving ownership from the seller to you involves a minimum of 2 files. The closing agent, whether attorney or escrow business, prepares a new deed which shows you’re the new legal owner of the home. There will also be a title search, called an abstract, within this closing package, verifying that the vendor is passing “clear and good title” to you, the buyer.
Truth In Lending
You received an estimated truth in lending statement in three days after you applied for your mortgage loan. Your closing package includes the “final” truth in lending statement per national law. This file ought to be equal or very similar to the first truth in lending quote you received. If your yearly percentage rate is significantly higher, ask the closing agent to clarify the changes. Don’t sign this document until you’re satisfied with the answer.
Mortgage
The first mortgage file contains your promise to provide your new home as security for the loan. This is the file your lender will use to complete a foreclosure should you default on your loan. The mortgage is not your loan, but is your pledge of property as collateral and security for your mortgage.
HUD-1 Settlement Statement
The form called HUD-1 summarizes all the fiscal elements of a closing package. This settlement statement displays all charges, fees and mortgage loan information involved in closing your new home purchase. Examine this statement carefully and ask for explanations of items which you do not know. The HUD-1 statement shows all buyer and vendor monetary advice involved in the home sale and closing.
Monthly Payment Letter
While the yearly percentage rate and the whole cost of your home loan looks on your final truth in lending file, your lender also supplies a written explanation of your monthly mortgage payments, including break downs for principal, interest, property taxes and insurance.
Mortgage Loan Notice
Your closing package contains the original loan note, signed by you. You agree to pay off the loan over its term in the designated interest rate. This file is similar to some loan notes you might have signed, but also mentions your mortgage, pledging your new home as collateral for the loan.
Title Insurance Policy
Title insurance protects you and your lender against future losses resulting from any “defects” in the title to your new home. The title investigation, or abstract, is designed to identify any possible title difficulties, however, on rare occasions, problems are overlooked. Title insurance protects against financial loss, should problems with your title appear later on.
Additional Documents
Proration arrangements, explaining how real property taxes will likely be divided by you and the vendor, and additional files required by your lender or state go into your closing package. The closing agent will have you sign an affidavit that certifies that you’re who you say you’re. You offer proof in the shape of a photo I.D., like a driver’s license, to verify your identity. The closing agent will ask you to state that signing all closing files is your “free act and deed .”