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 thru 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 thru 209 is for misc. credits to buyer as agreed to up-front.
Lines 210 thru 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.
With that in mind, it is important to understand a couple of concepts before analyzing and determining the effectiveness of that document. Although people do not always realize it, the purchase of a home is one of the b...
Fannie Mae supports the mortgage lenders in two different phrases, which includes “credit guarantee” and “portfolio investment. The “credit guarantee” business takes residential mortgages from banks and mortgage companies, and issues securities to generate cash flow back into the banks and
Palgo Holdings Pty Ltd carried on a business of making small secured loans. Each borrower would sign a two-part document. The first part of the document, titled “Secured Loan Agreement”, recorded the amount of the loan and the date on which the principal and interest was due. The second part of the document, titled “Bill of Sale/Goods Mortgage”, was made as a deed between the borrower as mortgagor and the lender as mortgagee. It also recorded that the terms of the bill of sale were set out in the schedule of terms attached.
This case study examines various real estate contracts – the Real Estate Purchase Contract (REPC) and two addendums labeled Addendum No. 1 and Addendum No. 2 – pertaining to the sale of 1234 Cul-de-sac Lane in Orem, Utah. The buyers in this contract are 17 year old Jon D’Man and 21 year old Marsha Mello; the seller is Boren T. Deal. The first contract created was Jon and Marsha’s offer to purchase Boren’s house. This contract was created using the RESC form, which was likely provided by their real estate agent as it is the required form for real estate transactions according to Utah state law. The seller originally listed the house on a Multiple Listing Service (MLS); Jon and Marsha agreed that the asking price was too high for the neighborhood (although we are not given the actual listing price), and agreed to offer two-hundred and seven-thousand dollars ($207,000) and an Earnest Money Deposit of five-thousand dollars ($5,000). Additionally, the buyers requested that the seller pay 3% which includes the title insurance and property taxes. After the REPC form was drafted, the two addendums were created. Addendum No. 1 is from the seller back to the buyer, and Addendum No. 2 is the buyer’s counteroffer to the seller.
Advises the borrower(s) that in the event the real estate vendor did not provide the Residential Property Disclosure or Disclaimer Statement, they have the unconditional right to rescind the contract of sale, within 5 days following receipt of this notice.
As a first time homebuyer, your mortgage contract provides proof of your entry into real estate. The contract protects both you and the mortgage lender. The contract dictates the terms and conditions agreed upon by you and the lender, all negotiations made relating to collateral and interest rates and fees.
Atiyah P, Adams J and MacQueen H, Sale of Goods (12th edn , Longman 2010) 145
It is necessary for the loan to be completely repaid and for the seller to be the lender to the new borrower. It is also recommended to sign the document in front of a Notary Public who will sign and seal the document. Copies of the Note should be given to the borrower and lender as well as a third party.
The idea behind the introduction of advance notices was to minimise the risk period between the delivery and registration of a deed in a conveyancing transaction as a real right in conveyancing only occurs when registration has been completed. The risk period for the purchaser consists of a potential situation where the seller becomes insolvent or the seller has granted a deed which transfers ownership to a third party which is then registered first. It is believed that the system of advance notices will remove the risk of losing legal title to property between payment and date of registration.
A contract of sale of goods is a contract by which the Contract seller exchanges or consents to move the property in goods to the buyer for a cash thought, called the price (Sale of goods act 1979). In this manner it’s an assention by which the seller consents to move the property in goods to the buyer for a cash thought, called the price.
• A statement that the Competent Valuator has (or has not) made a personal inspection of the property; and
If you don’t have a clue on what a FHA loan is, it’s basically a mortgage insured by the Federal Housing Administration (FHA) where the borrower pays for mortgage insurance, protecting the lender from a loss if he defaults on the loan.
step would be the closing step. All your work is done with you home. You’ve showed them
A mortgage is a form of debt, secured by the warranty of a specific real estate property. The borrower is required to pay back the debt in predetermined payments. The most common reason for acquiring a mortgage is to purchase real estate when it cannot be paid for up front. The homebuyer, in a residential mortgage, pledges their home to the bank. Over a period of years, the borrower pays back the loan with interest. Once the mortgage is paid in entirety, the owner retains the property free of any charges. However, in case of foreclosure, the bank has an entitlement on the house, as a form of insurance should the buyer default on repaying the mortgage. The bank can then sell the house, and use the capital to pay back the remaining mortgage.
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