The Documents

You will be asked to initial or sign a number of documents during the closing. Among the most important are:

Good Faith Estimate — A written estimate provided by the lender of all charges—including closing costs and pre-paid and escrowed items—which you are likely to pay at closing. You should receive this within three days of submitting your loan application. You’ll want to compare your estimate with the HUD-1 (see below) before your closing date.

Mortgage Note — A promissory note that states your intention to pay a specific sum of money at a specified rate of interest within a fixed period of time.

Mortgage — A legal document that gives the lender the right to take possession of the property if the borrower fails to pay off the loan. In some states, this is known as a “deed of trust".

Certificate of Occupancy — A document issued by a local municipality stating that the home meets all building codes and is suitable for habitation. You’ll see this document if you’re purchasing a newly built or renovated home.

HUD-1 — Also called the “settlement statement". This document provides an itemized breakdown of all costs and disbursements associated with the sale of the home. You are entitled to review this document a day before closing, so you should compare it with your Good Faith Estimate and resolve any issues before settlement.

Final TILA statement — Your “Truth In Lending Act” statement. This will disclose the full cost of your mortgage and annual percentage rate (APR). It will show any modifications such as rates and points that may have been made since applying for the loan.