When you're closing your home loan, you're never left in the dark about the costs and rates you'll be facing over the length of the mortgage. During the closing, you'll see a stack of "mortgage disclosures." We're here to highlight for you the most important of them.
Let's start with the Loan Estimate. It's a three-page document laying out all you need to know about the home loan you're about to sign. The Closing Disclosure is the next document you receive, reflecting finalized figures about closing costs.
The following are some of the most important details about these highly significant forms.
The three-page Loan Estimate (LE) form is a standardized form for home loans but not reverse mortgages.
The LE is the document you'll receive from First Centennial within three business days. The LE uses simple language instead of financial jargon, to give you the best possible opportunity to comprehend what you'll be responsible for over the life of the loan.
The Loan Estimate contains the following important pieces of information, which you should review and verify before signing the loan:
- Estimated interest rate, monthly payment and closing costs: These figures are the crux of the LE, and set the parameters you'll be dealing with regarding repayment. Since the LE is a standardized document, you can easily compare rate and payment estimates.
- Estimated taxes, insurance, and changes over time: While changing conditions mean LEs can't flawlessly predict the future, First Centennial Mortgage makes estimates about the ways taxes, insurance costs and alterations to rates and payment structures will take effect over the length of the loan.
- Extra features or penalties: If a loan contains extra conditions or costs, such as penalties for early repayment or negative amortization – in which the balance increases even when payments are on time – these items have to be listed on the LE. Be sure the details line up with your understanding of the mortgage.
Once the closing costs of the loan become clear, with title and seller charges coming in, First Centennial Mortgage issues another document, the Closing Disclosure. This form has to get to you three or more days before the loan is closed. If the terms, projected payments or total closing costs of the loan have changed between the loan estimate and the final sit-down to sign the papers, those alterations will be noted in the CD.
Checking the CD before putting pen to paper is an important late-stage step in the run-up to receiving a home loan. You should always be comfortable with anything you sign, and ask questions of us, the title company or the seller when you're unclear on any details.
Receiving a home loan can be a momentous occasion, and checking the documentation before sitting down to sign is a great way to ensure everything goes perfectly.
Do you have more questions? Contact the loan officer who shared this blog post or send us a message.