The closing of a real estate deal is the moment for which every home buyer waits. As your advocate in the home buying process, your Amalfi Estates® agent will be at your side to answer any of your questions and advise you through the signing procedure. However, it's a good idea to familiarize yourself with the various documents that will be presented to you. When you sign the closing papers and pay your closing costs, you will then become a verified home owner!
The following descriptions are provided by Fannie Mae:
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HUD-1 Settlement Statement
- This form, required by federal law, itemizes the services provided and lists the charges to the buyer and the seller. It is filled out by the settlement agent who conducts the closing. both the buyer and seller must sign it.
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Truth-in-Lending (TIL) Statement
- This is another document required by federal law that mortgage lenders are required to give to all loan applicants within three days of receiving their initial application. Among other things, it discloses the annual percentage rate (APR), which reflects the cost of your mortgage as a yearly rate. This rate may be higher than the interest rate stated in your mortgage because the APR includes any points, fees, and other costs of credit. The TIL statement also sets forth the other terms of the loan, including the finance charge, the amount financed, and the total payments required. Should the actual APR differ by more than a small amount from the lender's original estimate, the lender must give you a corrected TIL statement no later than at settlement. The lender does not need to give you a new TIL statement if the estimated APR proves correct, even if other disclosures have changed. For this reason, it is a good idea to check with the lender shortly before closing to see whether all the TIL disclosures are still accurate.
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The Note
- The mortgage note represents your promise to pay the lender according to the agreed terms. It is, in effect, a legal "IOU". Again, the terms of the loan are set forth, including the date on which your payments must be made and the location to which they must be sent. The note also details the penalties that will be assessed if you default (that is, if you fall behind in paying the loan) and warns you that the lender can "call" the loan (require full repayment before the end of the loan term) if you fail to make the required payments, if you sell the house without prior written consent of the lender, or if you otherwise violate the terms of your note or mortgage.
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The Mortgage
- The mortgage (or "deed of trust" in some localities) is the legal document that secures the note and gives the lender a claim against your house if you default on the note's terms. In effect, you have possession of the property, but the lender has partial ownership (called an "encumbrance") until the loan has been fully repaid. The mortgage restates the basic information contained in the note as well as the date of the final scheduled payment. It states the responsibilities of the borrower to pay principal and interest, taxes, and insurance in a timely manner; to maintain hazard insurance on the property without lapse; and to adequately maintain the property and not allow it to deteriorate.
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The Deed
- The seller must bring the deed to the closing, properly signed and notarized. It is the document that transfers ownership from the seller to you. As discussed previously, you should have decided what name or names are to appear on the deed.