Understanding the Most Important Mortgage Documents
Obtaining a mortgage for your first home can be a daunting task, especially when you consider the amount of paperwork required. Though your lender should explain all of the steps in the loan process clearly, it’s wise to have a basic understanding of the most important mortgage documents you’ll be signing.
Contrary to popular belief, the promissory note is your actual mortgage contract, spelling out all terms associated with the loan – interest rate, payment intervals and more. The promissory note will also include a provision that states what will happen in the event that you do not repay the loan.
Also known as “the HUD,” the settlement statement spells out line-item fees, such as real estate agent, lender and title fees, prorated items like prepaid homeowners insurance and inspection costs or association dues.
Deed of Trust
The security provision in the promissory note will point to the deed of trust, which supports the lender’s claim to your property should you fall short on payments. The deed of trust also indicates specific occupancy policies associated with your specific mortgage, such as move-in date and second home use.