Which document is the most important at closing?

Here’s a simplified breakdown of what documents you're signing when completing the closing disclosure form, the note, and the mortgage itself, brought to you by Jen LaCroix, Community Loan Officer for TCHFH Lending, Inc.:

The Closing Disclosure Form

The closing disclosure form should be delivered to you at least three days before your closing date. It provides details about your mortgage including the interest rate, term, and your projected monthly payment. It also breaks down your closing costs.

"You're going to see all the final numbers before closing," says Jen. "That's an important document, and you'll want to keep your eyes out for that before closing."

Read through the closing disclosure form and compare it to the loan estimate you received from your lender after you completed your mortgage application. It's common to see some differences among the numbers, but the terms of your loan should be the same. If you have any questions about your loan, ask your lender.

The Note

"At closing, once there, you'll be signing the note and the mortgage," explains Jen. The note is often called a promissory note (also known as a written promise). It represents your commitment to pay back the money you're borrowing to purchase the home.

It explains everything you need to know about your mortgage including the loan amount, the length of the loan, the interest rate, payment due dates, grace period for late payments, late charges, and other details of the agreement. Check that these numbers are exactly what you're expecting, so that you’re comfortable with what you’re promising. Share any concerns or mistakes you notice. You'll want them changed before you sign.

The Mortgage

The mortgage secures the note. This allows the lender the legal right to take your home away in the event that you don’t honor the promise to pay what you signed in your note. This process is known as foreclosure.

Simply put by Jen, "The mortgage is the agreement and it also outlines the terms of the note and paying the note back."

Your mortgage will involve two parties:

• The borrower, who may be referred to as the “mortgagor”
• The beneficiary, meaning the lender or the “mortgagee”

When it comes to closing on a home, anyone borrowing money to pay for a house will sign these three mortgage closing documents listed above. There will be a lot of additional documents to sign along the way, but those vary depending on each homebuyer's individual situation and lender. Be prepared to ask about each document you sign to ensure you are comfortable with what you are agreeing to.

A guide to the closing documents and other important household documents you should keep after you buy your house — and what you can consider getting rid of.

Navigating the paperwork and process when buying a home can be overwhelming. There are several documents needed for a mortgage application, such as pay stubs and tax returns. Once everything is settled, it is important to save certain documents related to your house closing. Here are a few tips on what you should retain and for how long.

Keep for one year

• Utility bills: At the end of the calendar year and once you've matched actual expenses to those that appear on your bank or credit card statements, you can toss utility bills.
• Change of address confirmation: When you purchase a house, you usually need to update your address with USPS to have your mail sent to your new house. You can shred the confirmation after you begin receiving the forwarded mail at your new address.

Keep indefinitely

• Home improvement purchases and receipts: You may not intend on selling your home anytime soon, but keep proof of purchases and upgrades you make, like adding new appliances or fresh drywall. They're helpful to demonstrate appreciated value to future buyers.
• Insurance policies: Store these vital documents in a safe spot so you can access account numbers and coverage limits, as well as agent contacts, at any time.
• Mortgage documents: Keep any mortgage paperwork you get when purchasing your home. Even if you pay off your mortgage, you'll receive a release or certificate of satisfaction; keep that, too.
• Home inventory: A home inventory can be done once you move in and is especially helpful if you have any homeowners or property insurance claims. Be sure to keep it up to date on a regular basis.

Keep until you sell your home

• Closing documents: Retain a copy of any document signed during your home's closing as a backup. Some experts advise keeping this collection of forms for several years after you eventually sell the home, too. A list of closing mortgage documents include:
  • Purchase agreement
  • Addendums
    
  • Disclosures and repair requests
    
  • Escrow information, inspection reports
    
  • Closing statement, among other things
    
• Abstract, title, appraisals and deed: Retain your own record, which outlines things such as legal boundaries and the history of your home.

Keep until it expires

• Home warranties: Again, store in a protected location that you'll remember so you have access to coverage and limitations.

Remember to keep all important documents in a dry, safe place. Many homeowners choose to keep them in a fire-safe box in their home or in a safety deposit box. Knowing what to keep is easier when you know what to save or shred.

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