Closing Documents

You’ll be asked to sign a number of documents at your closing. This list includes descriptions of the documents you’re likely to encounter.

Affidavits or oaths, are required by state law or the lender. For example, you may need to sign an oath that you plan to occupy the property you're buying. If you provide false information, you can face criminal penalties and your lender might demand immediate full payment of the loan.

Deed transfers ownership from the seller to you. The seller must bring the deed to the closing, properly signed and notarized. Your lender will have the Deed filed at your county's Deed Registrar so that it is a public record.

HUD-1 Settlement Statement, required by federal law, itemizes the lender's loan-related services and lists the charges to the buyer and the seller. It's filled out by the settlement agent who conducts the closing. Both the buyer and the seller must sign it. One business day before settlement, buyers have the right to inspect the HUD-1 Settlement Statement.

Mortgage Note is your promise to pay the lender according to the agreed terms, including monthly payment amount, payment due dates, and where payments should be sent. The note also states penalty fees charged if you're late with your payments and warns you that the lender can "call" the loan (require full payment before the end of the loan term) if you fall behind on your payments, or if you otherwise violate the terms of your note or mortgage.

Mortgage (or in some states, a "deed of trust") secures the note, giving the lender a claim against your house if you default on the note's terms. In effect, you have ownership of the property, but the lender has the right to reclaim the property upon default until the loan has been paid in full. The mortgage restates the basic information contained in the note and the date of the final scheduled payment. It typically obligates you to pay principal and interest, taxes and insurance in a timely manner, to maintain hazard (that is, homeowner's) insurance on the property without lapse, and to adequately maintain the property and not allow it to deteriorate. If you fail to comply with these requirements (defaults), the mortgage allows the lender to demand full payment of your loan balance immediately, foreclose on the property, sell it, and use the proceeds to pay off the loan and costs of foreclosure. In many states, if the sale proceeds did not cover the full amount of the debt, your lender can obtain a legal judgement against you for the shortage.

Truth-In-Lending (TIL) Statement gives you an estimate of your true rate of interest (the Annual Percentage Rate, or "APR") on your loan when all charges and fees are figured in, including points, fees and other costs of credit. Federal law requires mortgage lenders to provide the TIL statement to the applicant within three days of the initial application.