Closing documents
What documents should I expect to sign at my closing?
You will be required to sign numerous documents at the time of closing. In the majority of closings, the lender prepares and delivers the documents to the closing agent the day before or day-of closing. Most borrowers do not have the opportunity to review the documents prior to closing.
Moreover, most borrowers do not take the time to read the documents at closing because of time constraints. While the majority of the documents are simply disclosures and other non-binding notices to borrowers, a handful of the documents are vitally important and legally binding.The documents described in Items I-III are legally binding and ones that you should take the time to read at closing. Documents under Item IV are disclosure and non-binding documents. To view documents you must have Adobe Acrobat.
Legally binding documents
You should take the time to read all documents at or before closing.
1. HUD-1 Settlement Statement — This is the document which provides an itemized listing of the funds that are payable at closing. Settlement charges (closing costs) are categorized on the HUD-1 into seven series sections as follows:
700 Series Line Items (Total Sales/Broker's Commission) detail the realtor's commissions paid by the parties to the transaction. This section is only used in purchase (not refinance) transactions, and in most jurisdictions it is the seller(s) who pay the real estate commissions.
800 Series Line Items (Items Payable In Connection With Loan) detail the charges of the mortgage lender and/or mortgage broker including such items as loan origination and loan discount points, appraisal and credit report charges, lender document preparation fees, lender underwriting fees, lender tax service fees, lender flood certification fees, lender application fees, lender commitment fees, lender overnight delivery fees, etc.
900 Series Line Items (Items Required By Lender To Be Paid In Advance) detail any required prepaid interest charged by the lender as well as any homeowner's/hazard insurance premiums, mortgage insurance premiums, flood insurance premiums, etc.
1000 Series Line Items (Reserves Deposited With Lender) detail the number of months and monthly amounts required by the lender for establishing an escrow account to pay for real estate taxes, homeowner's/hazard insurance, mortgage insurance, flood insurance, or any other assessments required to be held in escrow by the lender.
1100 Series Line Items (Title Charges) detail the fees and costs charged by the closing agent for coordinating closing with the parties, conducting the closing, and issuing title insurance. These items include such things as settlement or closing fee, abstract or title search, title examination fee, document preparation fee, notary fee, attorney fee, title insurance premiums, etc. This section generally represents the bulk of the actual closing costs charged to the borrower
1200 Series Line Items (Government Recording and Transfer Charges) detail the recording fees, state/county/city transfer and recordation taxes, and any other governmental tax assessed for the transfer or recording of instruments.
1300 Series Line Items (Additional Settlement Charges) detail other miscellaneous charges not falling into any of the above categories. These items may include such things as survey costs, pest inspection fees, messenger/courier fees, etc.
2. The Note (Deed of Trust Note/Promissory Note) - The Note, sometimes referred to as either the Deed of Trust Note or Promissory Note, is the borrower's promise to repay the loan. The note identifies the amount of the loan, the rate of interest, the term of the loan (i.e., 30 year, 15 year, etc.), the payment due dates, the grace period and late charges, prepayment penalty provisions, and other general default provisions.
3. Deed of Trust (Mortgage — The Deed of Trust is a lengthy document (approximately 7 to 12 pages) requiring the signature of all owners of the property for the purpose of granting a security interest. After closing, the Deed of Trust is recorded with a legal description as a lien among the land records and as a matter of public record for the purpose of securing the borrower's promise to repay on the Deed of Trust Note/Promissory Note. In addition to identifying the property owners, the loan amount and the term of the loan, the Deed of Trust generally describes matters that would constitute a default on the loan thereby giving the lender cause to commence a foreclosure proceeding against the property.
Documents of disclosure
Lender documents that disclose various details about your loan and/or lender; non-binding (PDFs).