For nearly 25 years, our independently owned title company has leveraged technology to streamline the closing process, providing top-notch service at a competitive price for buyers, sellers, agents and lenders across the District of Columbia, Maryland and Virginia.
Often imitated but never replicated – we set the bar other title companies aspire to reach.
Buying a home is likely the biggest purchase you’ll ever make. It’s an exciting process, but can also feel overwhelming, especially when it comes time to review and sign the stack of home loan closing documents. These legal documents finalize the home buying process, so it’s important to understand what they are and what you’re agreeing to by signing them.
In this comprehensive guide we’ll walk through the key home loan closing documents step-by-step so you know exactly what to expect.
Overview of Home Loan Closing Documents
When you purchase a home with a mortgage loan, there are several closing documents required to complete the transaction. Here are the main documents you can expect to see
- Closing Disclosure: Outlines all the final terms of your mortgage loan, including interest rate, monthly payment, closing costs, escrow account details, and more.
- Loan Estimate: Your initial Loan Estimate from when you first applied may be included for comparison.
- Proof of Homeowners Insurance: Evidence you have secured a homeowners insurance policy on the property.
- Loan Application: Initial loan application with your signatures.
- Mortgage or Deed of Trust: Gives the lender a lien on the property as collateral for the loan.
- Promissory Note: Details your responsibility to repay the mortgage loan.
- Deed: Transfers legal ownership of the property from seller to buyer.
- Affidavit of Title: Confirms the property has a clear title.
- Title Insurance Policy: Insures against defects in the property’s title.
Let’s explore each of these closing documents in more detail.
Closing Disclosure
The Closing Disclosure contains all the specifics of your mortgage loan, This 5-page document includes
- Loan terms
- Projected monthly payments
- Closing costs itemization
- Cash needed to close
- Escrow account details
- Loan comparisons to your Loan Estimate
Lenders are required to provide the Closing Disclosure at least 3 business days before your closing date. This allows you time to review everything carefully and ask any questions before your final walkthrough and signing appointment.
Scrutinize the Closing Disclosure to ensure the interest rate, loan amount, fees, and other key details match what you agreed to. Also verify the seller’s name and property address are correct.
Loan Estimate
Your initial Loan Estimate from when you first applied may be included with your closing documents. This 3-page form has:
- Projected interest rate
- Estimated monthly payments
- Total closing costs
- Cash needed at closing
Including this document allows you to compare the final terms and costs to the initial estimate. Review it alongside your Closing Disclosure to see if any fees increased.
By law, only certain costs are allowed to change. If you notice any discrepancies or have concerns, speak up prior to signing off.
Proof of Homeowners Insurance
Lenders require home buyers to have homeowners insurance in place at closing. This protects the property securing the loan.
Your insurance agent will provide a document demonstrating active coverage on the home. Review it to verify the coverage amounts and other policy details are accurate.
Having this protection in place is also for your own benefit. Homeowners insurance safeguards your investment against damage and losses.
Loan Application
You’ll sign a final copy of the initial home loan application you completed. Double check all your personal information, income, assets, debts, and other details.
Notify your lender immediately if anything needs to be updated or corrected before closing. Any changes could impact your loan eligibility and terms.
Mortgage or Deed of Trust
The mortgage or deed of trust gives the lender a lien against the home. This document legally establishes the property as collateral for repayment of the loan.
It contains the loan amount, interest rate, payment schedule, and other key terms. Read over the details carefully to ensure accuracy.
This document gets recorded with the county and gives the lender the right to foreclose if you default on the mortgage. So you want to be certain you understand the terms and can afford the monthly payments.
Promissory Note
While the mortgage or deed of trust uses the home as collateral, the promissory note is your personal pledge to repay the loan.
This document spells out all financial specifics like the loan amount, interest rate, monthly payments, and repayment schedule.
Signing the promissory note legally binds you to adhering to the repayment terms until the mortgage loan is satisfied. Make sure to review the details closely before signing.
Deed
The deed legally transfers ownership of the property from seller to buyer. This document contains key information like the sale price, property address, parcel number, zoning, easements, and transfer tax.
Carefully check that all the details are accurate. Also confirm your chosen ownership structure – individual, joint, trust, etc. – is correctly reflected.
Once signed and recorded, the deed shows you as the legal property owner. Keep this document secure since it proves homeownership.
Affidavit of Title
The affidavit of title confirms the property title is clear. This means there are no claims, liens, or other encumbrances.
You as the buyer will sign an affidavit stating you are not aware of any title defects. This protects you and the lender from future title disputes.
Work with your real estate attorney to resolve any potential title issues prior to closing. An unclear title could delay the process.
Title Insurance Policy
Title insurance offers further protection against undiscovered defects in the property’s title. It covers legal expenses if a problem surfaces later – like an unknown lien or fraudulent deed.
Review the title insurance commitment to verify the coverage amount is adequate and all necessary endorsements are included. This policy safeguards your investment as the new legal owner.
Other Potential Documents
Depending on your state and specific transaction, additional documents may be required at closing like:
- Escrow account waiver
- Owner’s title affidavit
- ERR settlement statement
- State disclosures and tax forms
- HOA documents
- Lead-based paint disclosure
Your real estate agent or closing officer can explain any extra forms you need to complete and sign. Don’t hesitate to ask questions!
What to Do at Your Closing Appointment
Arriving prepared will help your closing appointment go smoothly:
- Review documents ahead of time and note any questions or concerns.
- Verify payment amount needed for closing costs and down payment. Have a cashier’s check or proof of wire transfer ready.
- Bring proper identification like a driver’s license or passport.
- Bring your home inspection reports and any necessary disclosures or addendums.
- Feel empowered to speak up about any uncertainties or discrepancies.
Take your time and don’t rush through signing the stacks of paperwork. Read everything carefully and ensure you fully understand what you’re agreeing to. This is a legal transaction with obligations that last for decades – so get all your ducks in a row!
With this checklist of what to expect, you can walk into your closing prepared and confident. Understanding these home loan closing documents means you’ll close on your new house with peace of mind.
The NoteThe 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 (e., 30 year, 15 year, etc.), the payment due dates, the grace period and late charges, prepayment penalty provisions, and other general default provisions.
- 4506T
- W9 (U.S. citizens, resident aliens)
- W8BEN (non-U.S. citizens, non-resident aliens)
For nearly 25 years, our independently owned title company has leveraged technology to streamline the closing process, providing top-notch service at a competitive price for buyers, sellers, agents and lenders across the District of Columbia, Maryland and Virginia.
- We are proud pioneers of creating a better closing experience for buyers, sellers, agents and lenders.
- Our instant REAL Credit™ for ordering settlement services online has saved our neighbors upward of $18 million to date.
- Our paperless, custom-built closing workflow software allows us to proactively keep customers in the know and avoid settlement surprises.
- Our free mobile app Close It!™ helps homebuyers and their agents better understand the complete cost to be paid at closing.
Often imitated but never replicated – we set the bar other title companies aspire to reach.
Legally binding documentsHere are samples of the
A three-day window is great for consumers who can use the time to fully review their documents, ask questions and gather funds and other items needed for closing, but the 72-hour window is firm.
This is your 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.
Every Home Buyer Will Get This Document (Your Loan Estimate Explained Line-By-Line)
FAQ
Which document is the most important at closing?
What are the closing documents at a closing called?
What is the 3 day rule for closing?
What documents will I receive before closing on a mortgage?
Before closing on a mortgage, you can expect to receive documents required by state and federal law and contractual documents. You can expect to receive various types of documents: Documents required by federal law These documents inform you of the key terms, provisions, and costs of your loan.
What are closing documents?
Closing documents are the paperwork that the home buyer, seller, or both must sign for a home sale to take place. Generally speaking, the documents inform the home buyer of the final closing costs, and the seller receives verification of the sale. Buyers and sellers don’t have to be present on the same day or in the same place during closing.
When should a home buyer receive a Closing Disclosure?
By law, home buyers must receive a copy of the Closing Disclosure at least 3 business days before closing. Buyers should take the time to thoroughly review these documents to understand the details of the loan terms, conditions, payments and funds required to close.
What is a mortgage Closing Disclosure?
The closing disclosure contains all of the details of your mortgage, including an itemized list of closing costs. It’s similar to the loan estimate — which you might also receive a copy of — that outlined the interest rate, monthly payment and other information about the loan.