Congratulations, you’ve reached the closing table! This final step of many in finding your dream home can be both exciting and overwhelming. At the closing both the buyer and the seller will be presented with a significant number of important documents. These documents are the conduits to the conveyance of the property or real estate from one party to another and can be confusing and cumbersome. That being said, having an attorney, whether you are the seller or the buyer, is important and valuable. An attorney will be there to advocate for you, protecting your interests and goals.
At the closing the parties can expect certain documents. Below is a list of the most common documents one can expect to encounter and a short explanation of each. Knowing what to expect may help to alleviate some of the stress and allow you to experience the joy that is often overshadowed in this process.
The Loan Note
This document details the terms of the loan being received. It includes the amount being borrowing, the term of the loan in years, the interest rate, the amount of the payment, due dates and potential late fees, and other important terms.
The Mortgage or Deed of Trust
This is the document that will be recorded with the registry of deeds to provide security/collateral for the loan.
The HUD-1 Form (Housing and Urban Development)
This is a document that provides an itemized listing of the charges to be paid at closing. Essentially, it summarizes both the seller’s and the borrower’s transactions and presents those transactions in a way that allows the parties to better understand the charges and payments associated with the sale. Expense items are entered on the sheet and the totals at determine the seller’s net proceeds from the sale and the amount of the buyer’s payment at closing.
The Good Faith Estimate (GFE)
This is a form that is provided following a purchaser’s application for a mortgage loan that details estimated fees and costs for the specific transaction. This is provided before the closing, but it is important to have the GFE at the closing table. Having the GFE at the closing table allows the parties to compare the fees the purchaser was quoted to the fees on the HUD-1 to ensure accuracy.
The Truth in Lending Disclosure
This document must be provided by the lender and contains information regarding the annual percentage rate, the finance charges, the amount financed, a payment schedule, the total of the mortgage payments, credit insurance, late fees, and any pre-payment fees. A preliminary copy will be provided within a few days of the loan application and a final version must be provided at closing.
Right to Cancel/Right of Rescission
This is a document that, by federal law, must be provided for any loan secured by a consumer’s principal residence that gives the borrower three business days to cancel the loan transaction for any reason without cost. This form is not necessary for a purchase transaction, but rather, presents when one borrows against their own home, for example, an equity loan.
Disclaimer: The information you obtain from this blog is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.
Josey Lyne Payne, Esq. 