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The Loan Process
Part 6 – Loan Documents! Otherwise referred to as “docs” in the mortgage
industry, loan documents can be intimidating. But, there are some simple and
effective steps you can take to remove anxiety you may be experiencing as you
ready yourself to sign loan documents. You now know that your loan has been approved, and
you have also satisfied any conditions your lender may have had. You have just received a call letting you know that
docs are at the Title Company, ready for your review and signature. What do you do now? First, it’s a good idea ahead of this time to let your escrow officer, Realtor, and or loan agent know that you would like a copy of the docs to review, prior to your actual appointment at the Title Company to sign them. This puts them on alert that you are going to take your time, and make sure you have thoroughly reviewed, and understand the docs. Make sure you also request a copy of the estimated
Closing Statement. Remember that the escrow officer is a neutral third
party in the transaction to all parties. The escrow officer can fax the docs to
you (be prepared for a long fax), or you can simply pick them up from the Title
Company. Now you can review these documents in the privacy of
your own home. You will definitely have some questions. Allow
yourself the better part of a quiet evening (if possible), and get a pad a paper
out and jot down your questions. Make sure to tell yourself not to panic if you see
something that looks terribly wrong. Most times it’s not, but if something is
wrong, the docs can be redrawn. Most importantly, check the note rate. Is it the rate
you locked in at? If you locked your loan on a 30-year fixed, does it
indicate 30-year fixed? If it does, how many points are you paying for this
loan? This can be found on the estimated “Closing Statement”, also known as
the HUD-1. Is there a pre-payment penalty? The estimated closing statement should be very close
to an accurate accounting of all closing costs. However, it may necessitate some
final adjustments even after your review. This is normal, and the adjustment is usually
nominal, i.e., an adjustment to the pro-rated days of interest charged, Fed-X
fees, or some other nominal adjustment. In making sure you have allowed yourself ample time
for review, it is just as important that you are timely with your scheduled
appointment to sign the docs at the Title Company. This will ensure enough time
for the loan to close on time. In the case of a refinance, this will be not less
then five-business days before the lock on your loan expires; in a purchase
transaction, not less then three-business days. If the lock term expires, and rates are up, you will
pay a higher rate than what you locked at. It will also require re-drawing and
re-signing the docs. The Title Company and the lender need at bare minimum
these times in which to fund, record, and otherwise finalize the transaction on
your home. Finally, make certain in your communications with
your loan officer, Realtor, and escrow officer that all conditions have been met
satisfactorily.
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