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Mortgage Loan Documents
The table below outlines the key loan documents required to close your mortgage. These documents are typically prepared by the settlement agent (also called a closing agent) and provided to the borrower to review and sign at least three days prior to closing. The loan documents outline the key terms of your mortgage and property purchase.
We recommend reviewing all mortgage loan documents carefully before signing them and focus on the Closing Disclosure because it outlines your final loan terms. You should use the Closing Disclosure to compare the actual terms of the mortgage to the terms proposed by the lender at the start of the process. If there are significant differences between the final mortgage terms as outlined in the Closing Disclosure and the terms the lender committed to at the beginning of the process, such as an increase in interest rate or closing costs, then ask the lender for an explanation. You should cancel the mortgage if the discrepancies cannot be resolved.
You can cancel your mortgage at any time before you sign loan documents but not after you have signed documents so make sure you are completely comfortable with the the terms of your mortgage and property purchase before you sign anything. If you cancel, or rescind, your loan, you may be out certain upfront, non-refundable costs and fees. But canceling a bad mortgage and finding a loan with better terms can save you thousands of dollars in closing costs or interest expense.
Please note that for a home purchase mortgage, borrowers cannot cancel the mortgage after they have signed loan documents. For a refinance, you can cancel your mortgage up to three business days after signing loan documents but we recommend that you not sign loan documents if you find any major issues
As illustrated by the table below, there are a lot of mortgage loan documents that comprise hundreds of pages, so the volume of paperwork can be overwhelming. Despite the number and length of documents, borrowers should take the time to review and understand each one.
Your Mortgage Note, for example, outlines your loan terms including your interest rate, loan length and key loan features including a potential prepayment penalty. If your loan has a unique feature such as an adjustable or variable rate or interest payment, then your note has an additional rider or addendum that explains the feature.
The Grant Deed indicates your ownership of the property and is filed with your county recorder office so it is a matter of public record. The Deed of Trust (or mortgage depending on what state you are in) is also submitted to your county recorder office and shows that there is a mortgage lien on the property. The First Payment Letter lets you know when your first loan payment is due, as well as the amount, so that you do not incur a late fee.
In short, these documents cover every aspect of the mortgage and home purchase transaction so borrowers should spend time reviewing them and making sure they are accurate. This is especially important because most of these are legal documents that are in the public domain.
- To review examples of these loan documents, click on a document title or icon in the table
Sources
"Understanding the Documents Involved." My Home by Freddie Mac. Freddie Mac, 2017. Web.