Real Estate Tip: Know Your Documents

Docs

When you sit down at the table to sign your mortgage papers, that big stack can be intimidating. I’m a notary signing agent, and I see the hesitancy in people’s eyes. “I’m signing my life away,” they often say with a sigh.

Don’t be distressed. If you know what you’re signing, you can get through the pile faster and feel better about what you are doing. Here is a guide to some of the more common documents you will find when you purchase or refinance a home.

 

MORTGAGE

 

This is the main document, and it is usually 8 to 15 pages long. You don’t need to read every word, but you should know what it means. You will probably initial most of the documents before signing at the end. This document is one of several that will be notarized.

 

The mortgage states that you are taking control of the property, and if you default on the loan, the property will go back to the bank. You also agree to occupy the home and to carry insurance.

 

NOTE

 

Here is where to find your interest rate. This document is usually three pages long, and it lays out the terms of your loan. When you sign the note, you promise to pay the loan back.

 

HUD-1 SETTLEMENT STATEMENT

 

This is a big grid with lots of numbers on it. This document is important, because it contains all of your closing costs. It also details which debts will be paid off by the loan. If you need to pay money at the signing, you can find the amount on line 1601.

 

RIGHT TO CANCEL

 

In some states, you have the right to cancel the loan within three days. This is another reason why you can go ahead and sign the documents without worrying about every little word. You could have four days to cancel if there is a Sunday during that time (the recission period).

 

TRUTH-IN-LENDING DISCLOSURE

 

This is a breakdown of all of the payments you will be making. It usually contains a page explaining some of the terminology.

 

PRIVACY POLICY

 

This document details how the loan company will (or won’t) share your personal information.

 

UNIFORM RESIDENTIAL LOAN APPLICATION

 

This contains all of the information from your loan application. It details your employment, income and debts.

 

NAME/SIGNATURE AFFIDAVIT

 

This is a document that verifies your name and signature. If you have any other aliases, you would list them here.

 

TITLE AFFIDAVIT

 

This document verifies that you are the true and rightful owner of the home. It also lists any liens or improvements on the property.

 

LIMITED POWER OF ATTORNEY

 

This document simply states that the bank can correct any typographical errors without having to re-draw new documents. Don’t worry – they aren’t allowed to use this document to change anything important.

 

These are the main documents. There are several more, but knowing the basics should give you some peace of mind.