What Documents to Review at a Closing for a Mortgage

What Documents To Review At A Closing For A Mortgage

Three important mortgage documents

1. Mortgage

2. Note

3. HUD-1 Settlement Statement

Mortgage

* People who sign only have an interest in the property and our not responsible to pay for the loan

* Make sure the correct legal description and address are listed

* Gives the rights of the mortgage company

o Usually very standard

* Secures the note

* Gives the lender a claim against the home if you fail to live up to the terms of the loan

Note

* Those who sign the note are responsible for paying the mortgage and their credit will be effected (positively and/or negatively) by the loan

* States the interest rate

o Fixed

o ARM loan and how often the interest rate will change

* States the loan term

o How many years the loan is

o A prepayment penalty will be listed if applicable

* States the late charge amount

o A percentage of the principal and interest

* States the principal and interest of the payment

o The escrow amount is not stated

* States the payment is due

o Check with the lender if there is a grace period

* States the loan amount

* Promise to repay the mortgage

* States what the lender can do if you fail to make payments

HUD-1 Settlement Statement

* A detailed list of all costs related to the sale of the home

* A precise record of the settlement costs

* Both buyer and seller sign

Helpful Tips

* Have an attorney present that represents you and you only

* You have a three day rescission period

* Review sections 900 and 1000 of the HUD statement if you sign for an escrow

* At closing you have the opportunity to make last minute changes

* Bring any documents that you previously received to the closing and refer to the documents at closing

* Check to see if there are any back taxes on the property

o Once you sign off on property those taxes are your responsibility

Explanation of the HUD-1 Statement

BUYER'S RECAP

Line 101 is for purchases, purchase price would go here.

Line 102 is for any personal property that is included with sale on purchases only.

Line 103 is Total for Page

Line 104 and 105 are for Mortgage Payoffs.

Lines 106 through

112 are items that buyer has agreed to pay for in advance.

Line 120 is the total of all charges to buyer.

Line 201 is money deposit given by buyer

Line 202 is new loan amount

Line 203 is for existing loans buyer will assume or pay to seller.

Line 204 through

209 is for misc. credits to buyer as agreed to up-front.

Lines 210 through

219 are for credits to buyer from seller for taxes, etc.

Line 220 is total credits to buyer

Line 303 is difference due to or from buyer.

SELLER'S RECAP

Line 400 and or 401 is the Purchase Price of Property

Line 402 is due seller for any personal property sold to buyer

Lines 403 to 405 are for misc. credits to Seller

Lines 406 and 407 are for taxes to be paid by Seller. These taxes are charged to buyer on Page Two of the HUD1, but then immediately credited back to buyer on Page 1 and charged to Seller on Page 1 on Lines 406 and 407 as stated above.

Lines 410 through 412 are deductions to seller that will be credited to buyer on lines 204 through 209 of the HUD 1 as explained above.

Line 420 is the Total due Seller minus any charges he is crediting buyer as explained above.

Line 501 is a deduction in Seller's total for any deposit he received upfront.

Line 502 is the deduction for total Settlement Charges as carried over from

Lines 503 through 509 are a deduction for any mortgages or liens the Seller owes on the property.

Lines 510 to 515 are for any taxes or assessments currently due on the property and are deducted from Seller's total due.

Lines 520 is the Total Deduction Amount for Seller

Line 601 is the Total Amount Due Seller at Closing

Section 700 of the HUD only refers to purchases. It describes all commissions paid to Realtors. Commissions are paid according to whatever the buyer and seller agree to in the purchase contract.

Section 800 of the HUD