If you are going to be purchasing a home in the near future, take a moment to educate yourself on the mortgage process. The current loan documents borrowers have to sign have been simplified over the years, allowing you an easier time understanding them and the conditions that go with it. These forms should be reviewed carefully, making sure they match your expectations and what you were told by the seller and your lender.
- Loan estimate. The loan estimate is a document that details the terms of your loan, including closing costs and the projected payments. You will review this document within three days of initially applying for a loan. Review this very carefully to make sure you understand what guidelines you are signing and adhering to.
- Closing disclosure. The closing disclosure includes information about the loan and its terms, including a detailed list of what is being paid for by the seller, the buyer or a third party. Double check that what you negotiated is correct and the correct party is paying for those item/s. This document will be delivered to you three days prior to closing.
- Promissory note. The promissory note lists all the details of the loan: length, interest rate, payment intervals and all other information that pertains to the loan.
- Mortgage/Deed of Trust. Depending on what state you are located, the loan will require you to sign a mortgage or deed of trust. Both documents assist in pledging the home as security for the loan. These documents will outline the use of the house: occupied, owner-occupied, second home or non-owner occupied.
Securing a home loan can be a complex process, especially if you haven’t done it before. Trust your loan officer, do some research and don’t hesitate to ask questions.