What are the 4 Most Important Mortgage Documents You'll Sign? (What You Want To Know Wednesdays)
The Loan Estimate and the Closing Disclosure. Under TRID these two new forms were introduced to the mortgage industry. These forms were designed to be clear for homebuyers to understand all of the fees associated with getting their loan. Your Lender will provide the Loan Estimate to you within 3 business days of receiving your loan application. The Closing Disclosure will be provided at least 3 business days before your loan closes. If you agree to proceed with the loan you will sign a full set of loan documents.
The Promissory Note (the note)
The note is the contract with the lender. It will have all of the terms of your loan: the rate, payment intervals, and payment changes, and will state whether you’ll incur a prepayment penalty.
The Security Instrument (the mortgage, or the deed of trust)
Both a mortgage and a deed of trust pledge the property as security for the note. Fannie Mae provides a list that specifies which states require mortgages vs. deeds of trust so you know which one you’ll sign along with your note based on where you live.
Depending on the loan you choose, you’ll need to comply with one of these three occupancy provisions contained in all mortgages and deeds of trust:
- Owner-occupied. You must move into the property within 60 days of closing and live there as your primary residence for at least one year. Then you’re allowed to use it as a rental or a second home.
- Second home. You can only use the property as a second home and aren’t allowed to rent the home.
- Non-owner-occupied. You’re paying a higher rate for this loan, so you’re free to convert occupancy to owner-occupied or second home if and when you see fit.
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* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.
