What happens at your loan closing?
Typically, the closing will take place at the office of a title company or attorney in your area who will act as an agent on behalf of the lender. You will be reviewing and signing several loan papers. The most important documents include: HUD-1 Settlement Statement This document provides an itemized listing of the funds that are payable at the closing of a mortgage loan. Items that may appear on the statement include commissions, recording fees and all of the other fees associated with your loan, i.e., points, appraisal costs and escrow amounts. Most items on the statement are numbered according to a standardized system used by all lenders. This document is commonly known as the closing statement or settlement statement and both the buyer and seller must sign this document. Truth-in-Lending Statement (TIL) This document provides full written disclosure of the terms and conditions of a mortgage, including the annual percentage rate (APR) and other fees. It is exactly the same as the TIL that you received immediately after your initial application, except it has been updated to reflect the final rate and fee information. Federal law requires that all lenders provide you with this document at closing. Note: This is the document you sign to agree to repay a loan. The note will provide you with all of the details of your loan including the interest rate, length of time to repay the loan. It also explains the penalties that you may incur if you fall behind in making your payments on the loan. Mortgage / Deed of Trust This document pledges a property to the lender as security for repayment of a debt. Essentially this means that you will give your property up to the lender in the event that you cannot make the mortgage payments. The Mortgage restates the basic information contained in the note, as well as details the responsibilities of the borrower. In some states, the document used is called a Deed of Trust instead of a Mortgage.
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