What Do You Sign, At The Closing of a Mortgage
At a recent Mortgage closing, I asked the attorney, if she owned a home? After a positive response, I asked how many homes she had owned. The answer was three. I then asked if she honestly knew, and read, what she was signing at their first mortgage closing. She responded with a smile and a NO!
Most people at their first closing , second closing or even their third closing , have no idea what they are signing. Wake up and smell the Roses. Most people are not supposed to. The Government has been giving classes for years. Surprise! Surprise! Surprise! This never helped the foreclosure situation. Remember. The Bottom Line, you’re responsible for whatever you sign. Don’t sign anything you don’t understand, especially the small print.
Thousands of people, over the last five to ten years, had no idea of what they were getting into. Why do you think, we are in the situation that we are in?
R.C.M. Is going to Help and change All of that !
The following are documents that are a part of a standard closing. Note that there may be additional documents, depending upon each individual mortgage requirement.
We are giving you a short description of what and why you will be signing these documents. We have also attached a copy of each document, so you can understand why you should hire an attorney, if you don’t understand each document.
We recommend that you request copies of all paperwork before any closing, and understand what you’re signing. By the way, bring three or four blue ink pens, a thermos of coffee and patience. You will be signing every document. There could be twenty or thirty.
- Interest Rate Disclosure: This in plain English, tells you what, I hope is a locked in rate. If you’re smart, you won’t sign anything that floats or increases over time.
- Bank Loan Information: This informs you, the amount you are borrowing and what the terms of the mortgage are, and if you have made a down payment, and pay for any points at closing
- Truth in Lending Disclosure Statement: You will sign-off, that you understand, that the information the financial Institute has disclosed, are understood & everything the financial institute has disclosed meets with the governments regulations including, the cost of mortgage, points, proof of insurance , filing fees, estimated taxes and mortgage insurance.
- Escrow Account Disclosure: This is the money you put upfront for Taxes, Insurance, and down payment.
- Loan Disbursement Acknowledgement: This is where the builder or seller acknowledges, if he owes anyone money, and if there are any liens on the property, from creditors, that need to be released on the disbursement of funds. Acknowledges that you understand were your money is dispersed.
- Note: This is a confirmation of mortgage that you promise to pay in U.S. funds, $ 10 Million dollars, plus Principle and interest to the lender, Time and place of Payment, the right to prepay without penalties, if you hit the lottery, failure to pay, conditions. Notice that any additional information will be sent by U.S. Mail, except for Saturdays, if it’s raining or if someone at the Post Office forgets to send, because the Union is calling for a slowdown related to upcoming negotiations.
- Security Deed: This Certifies that the bank really owns the property until you make All Payments, keep insurance coverage, Taxes, and upkeep of the property, and discharge any liens if you cannot pay… That’s an Oxymoron! This runs about 15 to 20 Pages.
- Signature/Name Affidavit: This is verification that you know who you are .And you need to fess up ,if you have any aliases.
- Monthly Payment Summary: This verifies that you know and understand what you monthly Payments are including Principle, Interest and Tax Escrow.
- Compliance Agreement: This is a confirmation that the lender is in the business making loan as Mortgage’s, and they can sell mortgage’s to Other countries, including China, Russia , Freddy Mac, Fannie Mae, etc. And that we have a lot of faith in these institution’s, and that you give up all your rights until you Pay the mortgage in total, and that you understand what you have signed.
- Notice of Right to Cancel: This says you can cancel within three days if you change your Mind. It has taken you thirty days, including sleepless nights to get here. Are you sure yet?
- Copies of your Tax Return: For the last 3 Years. ……….Are you Sweating yet?
- Closing Attorney’s Statement: This is where the Banks Attorney certifies, that he has informed you, on all the documents that you’re signing. And You Understand …..DO YOU REALLY? I know you Saves $350.0 to $500., On not hiring your own attorney, Is it worth it?
- First Lien Letter: This is confirmation that the Financial Institute or Mortgage Co. that gives you the loan is the first in line to the title of the property if you start missing any payments.
- Correction Agreement: This is a statement that if the Title Company discovers any misspellings or if anything needs to be corrected in the Legal Title, before they file at the courthouse. Believe me, this happens all the time. Make sure after 6 Months, you go to the courthouse and check things out.
- Limited Title Opinion: This is a History of the transactions of the Property & Legal Description.
- Commitment for Title Insurance: This is one of your most important documents. You pay for Insurance that you have clear title.
- Survey: Many mortgage companies are getting away from doing property surveys. I highly recommend having this done. This verifies that there are no encumbrances on the property. For example, one of my properties purchased had the neighbor’s fence over our property line. The Title Insurance protects your property so that the neighbor could not ever go back and claim the property years down the road, and it gives you the right to ask the fence to be removed. The survey will also include any easements on your property such as those created by the county for drainage, or by utility companies. The survey will be a “go to” tool in the future should you want to do any property improvements.