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.
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.
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