When you’re getting a mortgage, there may be many documents you’ll receive throughout the process. While this can get confusing and disorganized, it’s imperative you have an idea of what each document says, how it applies to your mortgage and why it’s important for you to understand.
Before you get into the mortgage weeds, so to speak, you may want to consider learning more about the documents you may receive from your lender during the process. Remember that these documents can vary by lender and by the type of loan you get. To understand what you specifically may receive, make sure to double check with your lender.
Closing Disclosure
The closing disclosure is a plain language document that you’ll receive a few days before your closing date. This will provide final details about your loan, including the loan amount, interest rate, interest and principal, taxes, insurance, closing costs and other associated costs and loan disclosures.
Deed
Also known as a property deed, a deed is physical documentation of the ownership of a property. The deed may include a description of the property, the grantor’s and grantee’s names and addresses, what the grantor received in exchange for the property and more. When the title is transferred to you, you should receive a copy of the deed.
Initial Escrow Statement
For homeowners, a mortgage escrow account is a special holding account for your homeowners insurance premiums, your mortgage insurance payments (if any), and property tax payments. The initial escrow statement provides information about any charges that your lender may make and take from the account, such as estimated taxes or insurance premiums.
Lender Documents
These include any other documents your lender may need to submit to you, i.e. an affidavit of occupancy.
Loan Estimate
After you’ve completed your mortgage application and submitted it to your lender, you should receive a loan estimate within a couple days. It is important to note that a loan estimate could change during the loan application process. This document is an explanation of your loan in plain language, which includes your loan amount, interest rates, monthly payment, escrow account and your closing costs and other associated fees.
Mortgage or Security Instrument
A mortgage or security instrument provides information about your responsibilities and rights as a borrower. After it’s signed, this document also gives your lender the right to take your property by foreclosure if you do not pay your mortgage according to your agreement. This may also be called a deed of trust.
Promissory Note
A promissory note is a legal document that lists the terms of repayment for the mortgage loan between you and your lender. This can include the total amount of the loan, down payment amount, monthly or bimonthly payments, the kind of mortgage (fixed or adjustable-rate) and more.
Notice of the Right to Rescind
If you’re not getting a mortgage to purchase a home (i.e. refinancing), you will likely get a notice of the right to rescind. As a legal protection under the Truth in Lending Act (TILA), the notice of the right to rescind allows you to cancel your loan with your lender within a specified timeframe.
Pre-Approval Letter
After you complete your loan application, your lender may provide you with a pre-approval letter that tells you the estimated amount of your loan. This letter is conditional and not the final loan amount. When you receive the letter, you will then need to decide if you’d like to follow through with the loan process.
State and Local Government-Mandated Documents
You may also receive any state and local government-mandated documents depending on where you buy a home or receive your loan. These generally collect your information and help protect you as a borrower.
Work with Your Lender
While this list can be a good guide for you as you’re starting the mortgage process, keep in mind that it’s not all-inclusive, and you may receive documents that are not on this list. In this case, it’s important to keep in constant communication with your lender to help you understand what each document is, if you need to sign it or keep it and how it differs from other documents you receive.
Don’t get intimidated by the amount of paperwork you receive. While it can seem like information overload, it’s necessary for you to get the full picture of your mortgage and future payments. Most importantly, it may all lead to your dream home.
This information is intended for educational purposes only. Products and interest rates subject to change without notice. Loan products are subject to credit approval and include terms and conditions, fees and other costs. Terms and conditions may apply. Property insurance is required on all loans secured by property. VA loan products are subject to VA eligibility requirements. Adjustable Rate Mortgage (ARM) interest rates and monthly payment are subject to adjustment. Upon submission of a full application, a mortgage banker will review and provide you with the terms, conditions, disclosures, and additional details on the interest rates that apply to your individual situation.
