The day has arrived. You’ve submitted all your financial documents and received a “clear to close.” Now, you may be wondering what else happens before your new home loan or refinance is official. At the closing table, the amount of paperwork you have to review and sign might seem overwhelming, but as with most steps of the homeownership journey, knowing what to expect can put your mind at ease.
Let’s take a look at the documents you’ll be reviewing in your closing package and what the closing process looks like.
Buying a home is likely one of the biggest financial decisions you’ll ever make. After finding the perfect house, securing financing, and signing the purchase agreement, the next step is mortgage loan closing. This is when you’ll sign the final paperwork and get the keys to your new home!
Closing can feel overwhelming with the stack of documents placed in front of you. I’ll walk through the key mortgage loan closing documents, so you know what to expect. Understanding these forms makes the process smoother, so you can confidently sign on the dotted line.
The Closing Disclosure
The Closing Disclosure, sometimes called the CD, itemizes all the costs associated with your mortgage transaction. This form combines and replaces the HUD-1 settlement statement and final Truth in Lending disclosure.
The lender is required to provide the Closing Disclosure at least three business days before your closing date This gives you time to review all the terms and costs before the big day,
The Closing Disclosure breaks down all the details into five sections:
- Loan terms – Details like the loan amount, interest rate, and monthly payment
- Loan costs – Origination charges, services you can’t shop for, and services you can shop for
- Other costs – Includes taxes, homeowners insurance, and pre-paids
- Total closing costs – The total of your loan costs and other costs
- Cash to close – The total amount you need to bring to closing
Scrutinize the Closing Disclosure to ensure the terms match your Loan Estimate Look for any changes in fees that seem excessive or unwarranted, Don’t be afraid to ask your lender questions if you notice any discrepancies,
The Mortgage Note
The mortgage note is your promise as the borrower to repay the loan under the agreed terms. This document outlines all the key details of your mortgage:
- Loan amount
- Interest rate
- Monthly principal and interest payments
- Loan term
- Late fees and grace periods
- Prepayment penalties
The note also states the lender can foreclose on the home if you fail to make payments. Take time to understand all the terms before signing.
The Mortgage or Deed of Trust
While the note is your promise to repay the loan, the mortgage or deed of trust gives the lender rights to the property. This document “secures” the debt by making your home collateral for the loan.
If you default, the mortgage gives the lender the right to sell your home to pay off the remaining loan balance. The mortgage remains active until you pay off the loan in full.
Key details in the mortgage include:
- A legal description of the property
- The amount and terms of the loan
- Your responsibility to pay property taxes and maintain insurance
- The lender’s right to foreclose if you default
The HUD-1 Settlement Statement
At closing, you’ll sign the HUD-1 settlement statement. This itemizes all the transaction costs and details how the money flows. Sections of the HUD-1 include:
Section A – Charges related to your specific loan, like origination fees and points
Section B – Details adjustments for property taxes and homeowners insurance
Section C – Costs for title insurance and services
Section E – A summary of all the transaction costs
Section G – The total amount you need to bring to closing
The HUD-1 helps you see where all the money is going. Make sure the totals match the Closing Disclosure.
Affidavits
You’ll likely sign various affidavits at closing. These are legal statements affirming certain facts. Common affidavits include:
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Occupancy affidavit – States you’ll occupy the home as your primary residence. This is required for certain loan types like FHA.
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ALTA statement – Confirms there are no other liens against the property. Protects the lender by showing their lien takes top priority.
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Title affidavit – Affirms no changes were made impacting title since the closing documents were drawn up.
Don’t hesitate to ask your closing agent to explain any affidavits you’re unsure about. Never sign a document you don’t fully understand.
The Residential Loan Application
You’ll need to re-sign the residential loan application, also called the 1003. This restates all the key details of your loan application:
- Borrower information
- Employment and income
- Assets and liabilities
- Property information
- Loan amount and terms
The lender has you re-sign this at closing as one final confirmation. This protects both you and the lender by verifying all parties are on the same page regarding the mortgage terms.
The Promissory Note
In addition to the mortgage note made out to the lender, you’ll also sign a promissory note to the title company. This documents that you promise to repay any outstanding fees owed to the title company.
Such fees can include additional recording or overnight mailing costs that arise between loan closing and recording with the county. The promissory note makes you legally responsible for paying these costs.
Homeowners Insurance Documents
Don’t forget about homeowners insurance! Most lenders require insurance at closing. The insurance documents typically include:
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Insurance binder – Temporary insurance coverage during the underwriting process.
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Proof of paid premium – Shows you paid for one full year of homeowners insurance.
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Insurance policy – The full insurance contract with coverage details. Your lender keeps this on file.
If you already have insurance in place, provide these documents to your lender and closing agent. Without proof of coverage, closing may be delayed.
The Deed
One of the most important documents is the property deed, which officially transfers ownership. The deed contains:
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Titleholder names
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Property address
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Legal description of the land
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Sale price
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Notarization and signatures
After signing the deed, you’ll legally be the owner of the home! Recordation with the county completes the purchase.
Closing Documents Takeaways
While the stack of mortgage documents seems overwhelming at first, being familiar with the key forms helps the closing process feel more manageable.
Here are some key takeaways about mortgage loan closing documents:
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Review carefully – Don’t rush. Understand what you’re signing.
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Ask questions – Get clarification on any confusing terms or fees.
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Bring valid ID – You’ll need government-issued ID like a driver’s license.
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Get copies – Request copies of signed documents for your records.
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Verify figures – Double check totals match on all the forms.
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Breathe – Stay calm and focused during the busy process.
With preparation and organization, your mortgage closing can go smoothly. Before you know it, you’ll have the keys to your new home!
Who will be present at closing?
Before we get into what’s in your closing package, we’ll review the key players at the closing table.
If you’re purchasing a home, closing usually involves:
- The buyers/borrowers (you and any co-borrowers who are also listed on the mortgage)
- The sellers
- Your real estate agent
- The seller’s agent
- A settlement agent who will facilitate the paperwork (this person may be an escrow or title company officer, attorney, real estate agent, mortgage broker, or homebuilder)
- Your real estate attorney, if you have one (not required in all states)
If you are closing on a refinance, you will likely have a smaller crew, including:
- The borrowers (you and any co-borrowers who are also listed on the mortgage)
- A title agent or notary who will provide and observe the signing of the paperwork (nearly all Better Mortgage refinances are facilitated by a mobile notary for your convenience)
When all necessary parties are present, you will have the green light to sign and initial your way through the closing package.
What is a closing package?
A closing package is a collection of documents that you’re required to sign on closing day to finalize your home purchase or refinance. It includes title, homeownership, and mortgage documents. After you sign on each dotted line, youll be legally obligated to meet the terms in these contracts, so don’t be afraid to ask questions about anything that seems unclear.
The exact documents in your closing package will vary based on where you live and what kind of property you’re buying or refinancing. But let’s go through some of the most common closing documents you’re likely to encounter.
A closing disclosure, formally known as a “Final Truth-in-Lending Disclosure,” is designed to ensure you understand the terms of your home loan. Your lender is required to provide the initial closing disclosure 3 days before closing, allowing you time to review and check for errors. Be sure to read it over carefully so that you can ask questions about your final closing figures.
The closing disclosure lays out all the details of your home loan, including the principal loan amount, interest rate, and your total monthly payment. This document also includes information about your closing costs and how much money you’ll need to bring to the closing table.
A promissory note, sometimes simply referred to as “the note,” is a document you sign to indicate that you promise to repay your mortgage. It outlines information about your home loan, including the amount you owe, any relevant repayment dates, and the total length of time for repayment. This document also explains what will happen if you decide to stop paying or are unable to pay your mortgage.
If any information in your promissory note is different from what youve discussed with your lender, contact them right away to get clarification and/or make necessary changes.
In exchange for lending you money to purchase the property, the deed of trust is the lender’s guarantee you will pay off the loan as agreed. It reiterates the loan information outlined in both the closing disclosure and the promissory note. However, it also details the rights and responsibilities of the borrower and lender.
For the borrower, the deed of trust secures equitable title, which means you have the right to live at the property, make improvements, resell it, and benefit from any equity gained in the property through repayment of the loan or increased value.
The deed of trust also outlines the lender’s rights in the case of default. For instance, most mortgages contain an acceleration clause. The acceleration clause states that if you are unable to abide by the terms of the loan, such as keeping an up-to-date homeowners insurance policy, the lender has the right to declare your loan in default and request payment in full. If you are unable to pay the loan off in full at that time, the lender has the right to start foreclosure proceedings.
The initial escrow disclosure provides you with information about the specific charges you will be responsible for paying into escrow each month according to your mortgage agreement. These costs may include homeowners insurance premiums and property taxes. If you’re required or have elected to let your lender manage your escrow payments, this disclosure will tell you how much of your monthly mortgage payment goes toward these amounts.
Each month, these amounts will be collected in a separate, independently managed account, known as an escrow account, so theres enough to pay your homeowners insurance provider and your taxes. Keep in mind that the lender may use escrow for other charges or premiums, such as private mortgage insurance (PMI).
Usually, the first time you see this document will be at closing. Lenders are only required to provide it within the first 45 days of establishing an escrow account for you, and it’s likely that whoever services your loan will provide it. After the initial escrow disclosure statement, they must also send you an escrow account statement on an annual basis.
The mortgage servicing disclosure lets you know that your lender has the right to sell your loan to another loan servicer. The loan servicer is who you make mortgage payments to each month. If your lender will not be servicing your loan, this document will outline pertinent information about the transfer and what to do should any issues arise.
Even if your mortgage servicer does change, nothing else about your mortgage will be adjusted—only where you send the payments.
If you are refinancing an existing home loan, you will also find a right to cancel form in your closing package. As the name indicates, this form allows up to three days to cancel your new loan. This document contains information about when and how you can cancel your home loan and what happens if you decide to do so.
This form only applies when you are refinancing, so don’t expect to see this for purchase transactions.