After Approval: Understanding Mortgage Documents and Why They’re Important

Are you part of the 34 percent of buyers who are purchasing their first home this year? If so, you’re probably feeling pretty excited.

You might also be feeling a little stressed, especially as things are coming to an end and you’re getting ready for the closing process.

Closing can definitely be anxiety-inducing, especially when it comes to gathering all the necessary documentation and making sure you’re prepared for the big day.

If you want to make sure you have everything you need to close on your house, keep reading.

Listed below are some of the most important mortgage documents that are required when you’re closing on your house.

Mortgage Documents You Need to Have

Closing on your house is the final step in the home buying process. Once you make it through this step, you’ll have the keys to your new kingdom and will be ready to move in!

To make sure closing day goes smoothly, you’ll need to make sure you have the following documents handy:

Closing Disclosure

This is the first document you and your closing agent will review. It discloses all the costs related to your home purchase. These costs include things like loan fees and real estate taxes. It might also outline modifications made to your interest rate or other aspects of your loan.

Loan Estimate

A loan estimate is a form that covers all the essential information regarding your loan. You should have received your loan estimate within a few days of applying for a loan. The loan estimate will outline things like the total amount of the loan, the repayment schedule, and your interest rate.

It’s important to compare your loan estimate and closing disclosure when you sit down on closing day. There may be some small differences in things like interest rate, but if you notice any major differences, be sure to address them with your closing agent right away.

Promissory Note

A promissory note provides legal evidence of your mortgage, as well as your pledge to repay the loan. A copy of this note will be kept with your county clerk as part of the public record.

It contains information about the amount of your loan, the length of the term, the interest rate, and the repayment schedule. It also details the penalties you’ll face if you do not keep up with your mortgage payments.

Deed of Trust

A Deed of Trust acts as a security instrument. When you sign it, you agree that your home will act as security for your loan. Basically, you agree that the lender can foreclose on your home if you do not keep up with your loan payments.

Certificate of Occupancy

A certificate of occupancy certifies that a newly built home complies with all state and local building laws and codes.

This document is usually issued by your city’s building department or another local government agency. It’s only necessary if you built your home or purchased a home that was newly built.

Notice of Right to Cancel

Federal law requires your lender to provide you with this document. It gives you a three-day window to cancel your new loan.

Initial Escrow Statement

This document outlines some additional charges your lender expects you to pay. These charges include things like taxes and insurance premiums.

State and Local Government Documents

You may also be required to sign some additional documents from your state and local government.

Specific documents vary from state to state and city to city, but they’re usually focused on gathering information about you and your home and making sure you’re protected.

Proof of Homeowner’s Insurance

Homeowner’s insurance is legally required before you can finalize the purchase of your home. Make sure you have documents ready to go that prove you’ve purchased insurance before your closing day.

Home Inspection Reports

You’ll also need to provide copies of your home inspection reports. These reports show that your home is safe to occupy, up to code, and does not have any serious issues (or that you are aware of these issues at the time of the closing).

Valid ID

Last but not least, you’ll need to have a valid ID on hand. Make sure the first and last name on your ID matches the first and last name you’re using on all of your mortgage documents.

Preparing for Closing Day

As you can see, there are a lot of documents you need to have available when your closing day rolls around.

It’s best to keep all these documents in a folder or binder. That way, you can easily access them as needed and won’t have to worry about hunting for them when the time comes to move into your new house.

There are some other steps you can take to make your closing day a little easier and less stressful. Here are some tried and true tips meant specifically for first-time home buyers:

  • Use a document retrieval service to locate any missing documents — you can learn more here about how these services work
  • Perform a final walk-through to verify that the house is in good shape
  • Make sure all the members of your team (realtor, mortgage professional, attorney, etc.) can make it to the closing

Make sure you’ve set enough time aside for the closing process, too. It takes several hours to go through everything, and you don’t want to constantly be looking at your watch hoping you’ll be able to make it to your next appointment.

Learn More About Buying a Home Today

You now know more about all the mortgage documents you need to have on hand when you’re getting ready to close on your house.

Getting ready to close is exciting, but it can also be stressful. If you make sure you have all of these documents ready to go, you’ll likely find that the closing process goes by much more smoothly.

What if you’re not quite ready for the closing process yet?

If you’re still in the earlier stages of home buying, don’t worry. We’ve got lots of other resources for you.

Head to the Real Estate section of our site today to learn more about common home buyer mistakes, homeowner’s insurance, and more.