Give special attention to these items at closing

REAL ESTATE MAILBAG

February 06, 1994|By MIchael Gisriel

Q: My wife and I recently received a mortgage loan commitment from a lender. At closing we understand that all of the loan documents we sign are important. But which should we give special attention to?

A: You will sign many documents at closing. Many are self-explanatory, such as declarations that you intend on occupying the property, that you have not given any false statements to the lender, or that your correct mailing address will be the property address. You should review each of these documents before signing them.

Also, there are certain documents that are of paramount importance. You will be signing a final "Truth in Lending Statement."

You should note that the annual percentage rate may not equal your "note" rate. This is because the annual percentage rate reflects the lender's true yield or actual earnings when you also figure in the points.

Interestingly, if you look at the total of payments, you will see a fairly accurate estimate of what you can expect to pay over the full term of the loan. The document will also state whether any late charge will apply for a late payment.

It should also note whether any penalty exists for prepayment of your loan.

You will also sign a note, which is your promise to pay back the lender. You should review your note to determine that the interest rate, loan amount and term of the loan are correct. Also, the note should state that there is no penalty for prepayment and that the late charge should not exceed 5 percent of your overdue payment of principal and interest.

Another document that you will sign is the deed of trust or mortgage. With this document, you pledge the house as collateral for the loan.

If you fail to make the payments and the lender properly notifies you of this default, then the lender will be authorized to have the house sold at public auction or foreclosure.

The title attorney will review these documents to determine that they are properly drafted. You will also have the opportunity to review them at settlement. After you have reviewed these documents at settlement, you will sign the loan papers and receive copies.

You should always keep a separate file for your settlement papers.

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