The home buying process can be confusing. At the closing table, you may feel like papers are flying every which way and that you have no idea what you have just agreed to. That’s why it is so important to know what you are signing ahead of time. Here are a few real estate closing documents you should know.
Loan Application
Also called the 1003, this real estate closing document is the application you completed when initially applying for the loan. It will show the income, assets, and debts you disclosed. When it comes time for closing, you will review the original and sign a copy.
Closing Disclosure
On this document, you will see all the numbers laid out. It will have the purchase price, loan amount, pre-collected taxes, credits, insurance, lender fees, title fees, real estate agent broker fees, and any other charges related to the purchase. Your lender is legally obligated to disclose this to you 3 days ahead of closing.
Amortization Schedule
This is a schedule of your loan payments over the life of the loan.
Title Commitment
The title commitment is a real estate closing document that shows the chain of title and any judgments, liens, or claims on the property. The title company’s job is to prepare a clean title to pass on to a new buyer.
Title Insurance
There are two types of title insurance, the lender’s policy, and the owner’s policy. The lender’s policy is obligatory and protects the lender from any title issues. Depending on the title company, the owner’s policy is sometimes optional and protects the owner from any title issues.
Mortgage
A mortgage is a lien that holds the property as collateral for repayment. Anyone that appears on the deed will appear on the mortgage and sign. This will be recorded in public records.
Note
This document goes in hand with the mortgage. The mortgage note is what legally obligates you to pay back the loan. Your lender could potentially sell this document to a bigger lender after closing. Whoever holds the note is who you will make mortgage payments to.
Deed
The deed shows the transfer of title from one owner to the next and will contain the names of the sellers, buyers, and legal description of the property. After closing, the deed will be recorded in public records.
Other Title Documents
The lender and title company are two separate companies, so the title company will have a few other real estate documents you will need to sign. These are typically documents that protect the title company from any undisclosed information.
Intro To Real Estate
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