Closing Documents Cheat Sheet

Your Closing Documents Cheat Sheet
Learn what red flags to look for in your closing documents

In addition to title insurance and title searches, the title company also handles boatloads (houseloads) of closing documents. Closing documents are a lot to process – contact your title company representative at any time if you have any questions throughout the closing process.

• What red flags should I look for in the closing documents? Once you receive your documents, review them carefully.
• Verify your own understanding of all documents and check for errors. Questions to consider:Is your personal information accurate on all documents?
• Are the interest rate and monthly payments what you expected?
• How do the Loan Estimate and Closing Disclosure compare?
• Are there any unexpected fees?
• Do all figures match from document to document? If there are any discrepancies, talk to your lender right away.

What are the Different Kinds of Closing Documents?

The kinds of closing documents you’ll see vary from state to state, but several are required by law.

Documents Required by Law

Loan Estimate

Also known as a “Good Faith Estimate,” this document contains important information regarding your loan: how much you’re borrowing, monthly payments, interest rate and closing costs.

Every lender must use the same three page Loan Estimate form, and by law provide the Loan Estimate to you within three days of receiving your loan application.

Closing Disclosure

The Closing Disclosure must be received at least three days prior to closing. This gives you time to study the Closing Disclosure and compare it to the initial Loan Estimate that you received. The closing disclosure is a five page document that lists the key terms of the loan, final closing costs, and details regarding the exchange of money. Numbers in the Closing Disclosure should closely resemble the Loan Estimate numbers.

Initial Escrow Disclosure

As part of your mortgage agreement, you will make payments into an escrow account. The initial escrow disclosure shows the amount the buyer pays each month, and any upcoming disbursements or withdrawals from the account (taxes, insurance bills, etc).

Notice of the Right to Rescind (Refinance Only)

Notice of the Right to Rescind (refinance only) In instances where the buyer is opting to refinance, his or her right to cancel is mandated by the government – mortgage lenders are required by law to allow buyers three days to back out of closing. This is also called recission.

Contractual Documents

Promissory Note / Mortgage Note

By signing the promissory note, you agree to repay your mortgage. The promissory note includes details about your loan including the total amount owed, the interest rate, payment dates, how much time it will take to repay the mortgage, and what will happen if you fail to pay.

Mortgage, Security Instrument, or Deed of Trust

Depending on the state you live in, the mortgage rehashes a lot of information already presented in the promissory note. By signing this document, you agree that if you fail to make payments on your home, the lender has the right to take your property by foreclosure.

State and Local Government Mandated Documents

These documents vary depending on where you live. They typically protect the buyer and collect information.

Lender Documents

These are documents that lenders expect you to sign at closing. For example, an affidavit of occupancy.

Deed

If you are purchasing the home outright and not using a mortgage, you would receive the deed at closing as opposed to the deed of trust.

Title Company Documents

Title Insurance Commitment

The title company will present a document that delineates any liens or other blemishes to the title that could delay the transfer of title to you.

ALTA Settlement Statement

This document itemizes all the fees and charges to the buyer and seller.

Judgement Affadavit

A sworn statement verifying any of your recent judgements, marriages, or divorces, or lack thereof.

Disbursement Authorization

A document that states the title company is allowed to disburse funds from escrow.

Errors and Omissions Compliance Agreement

By signing this document, the buyer agrees to cooperate with the lender in instances of clerical error or omission in the loan closing documentation.

Closing Thoughts & Other Tips on Closing Documents

Buying a Home is a Colossal Commitment.

Take your time reading the closing documents, and do not feel rushed at any point.

Newlyweds Check Your Names

Make sure the name on all closing documents matches the name on your ID.