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Boston Apartment: 3 Important Mortgage Documents

Boston Apartment

Boston Apartment: 3 Important Mortgage Documents

Buying a home requires a lot of paperwork. There are many steps to be taken before the mortgage is approved.  First you need the mortgage lender to pre-approve you, then you need to provide all your private financial documents, give details about your income as well as residence history. The final touch is to sign disclosures to get your loan approved and then finish it off with more documents at closing.

These are the three most important closing documents you’ll be signing.

 

The settlement statement

This is the document which shows you all the line items you’re paying on your financed home purchase. It is also known as the HUD (housing and urban development settlement statement). It shows the individual fee along with the transaction summary and line-items.

These fees are broken down into the following categories:

  • Commissions to the real estate agent and buyer along with the real estate fees.
  • Lender fees along with the rate, appraisal, credit report and loan processing fees
  • The amount you have deposited with the lender (As an escrow). This amount will also be used to pay your insurance and property taxes.
  • Loan interest from the loan funding day to the end of the funding month
  • There is also the title fee which includes title insurance in case there are third-party claims on your property.
  • It can also include contractor fees, homeowner move-in/move-out fees.

The third page shows how close or far your initial Good Faith Estimate was from your HUD, so you know if your closing terms match what your lender originally quoted to you.

 

The promissory note

The promissory note is the one which spells out your loan repayment terms and not the mortgage document.  It details the terms of your plan, along with the payment intervals, rate, payment changes and the penalty details (in the event you pay it off early). It also has details about the lender asking you to keep the home as a security so that they can claim the property if you default on your loan.

 

Boston Apartment: The security instrument

All lenders require borrowers to pledge their property as security for the note.  All states have different terms and conditions so you have to check with your provider, whether you need the mortgage or deed trust to sign with your note.

You also need to comply with these provisions:

 

Owner-occupied. You must move into the property within 60 days of closing and live there as your primary residence for at least one year. Then you’re allowed to use it as a rental or a second home.

Second home. You can only use the property as a second home and aren’t allowed to rent the home.

Non-owner-occupied. You’re paying a higher rate for this loan, so you’re free to convert occupancy to owner-occupied or second home if and when you see fit.

 

We hope you liked our guide “Boston Apartment: 3 Important Mortgage Documents “.

 

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