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Buying a home for the first time is an exciting and intimidating venture. There is a lot that goes into applying for a mortgage and securing the financing you need to buy your first home. Unfortunately, the process of getting approved for a mortgage is not one that you learn about in school. If you are a first time home buyer, you need to know what mortgage documents to expect during the home buying process. That way, you can feel confident and comfortable when applying. Use this post as a guide. Below, you will learn about the five most important mortgage documents you need to be familiar with before taking out a mortgage for the first time.
Mortgage Application
First, you will need to file a mortgage application. This is an obvious, but presumably still unfamiliar, first step. When filing a residential loan application, you will need to complete extensive paperwork. The mortgage loan application features many different sections requiring information about your personal finances, personal identifying information and the potential property and mortgage itself. Borrowers should have personal and financial information on hand when filling out a mortgage application. Be prepared to present your social security number, martial status, date of birth, contact information and information about your income, expenses, assets and liabilities. That way, you can easily complete the first, and most important, of many mortgage documents.
Loan Estimate
The next document you will receive as a first time home buyer is called the loan estimate. This mortgage estimate document will detail all the most important terms of a mortgage. It includes the estimate of the total amount you are approved to borrow for your real estate loan. In addition, the loan estimate document features key terms of your mortgage agreement, like the interest rate, projected payments and closing costs for buying a home. Lenders have just three days to provide these mortgage documents to you after you file a mortgage application. Once you have received a loan estimate, you should expect more mortgage documents to be arriving shortly.
Promissory Note
The next document you can expect during closing is called the promissory note. A promissory note is one of the mortgage documents that you sign to indicate that you agree to repay your mortgage. This mortgage promissory document will include all the details about your real estate loan. It should include the total amount you are borrowing, the mortgage interest rate, a payment schedule and details about where your payments will be sent. In addition, the document should also include details about what should happen in the event that you are unable to make your monthly mortgage payments. Your signature on these mortgage documents indicates your agreement mortgage repayment terms. This a very crucial document to be familiar with prior to signing.
Right To Cancel
When applying for a mortgage and buying a home, you can also expect to receive a right to cancel document. These types of mortgage documents include details about how you can cancel a loan, should you need to do so. In addition, it will also outline the actions that will occur should you choose to cancel a mortgage loan. The closing disclosure document will detail your right to cancel a loan within three days. In some cases, you may have up to three years to cancel your mortgage. Carefully review your right to cancel document and closing disclosure document. These are the mortgage documents that will protect you as a buyer.
Deed Of Trust
Mortgage documents also include a deed of trust. As a homebuyer, your signature on a deed of trust indicates that your home is the security for your mortgage loan. In the event that you are unable to make your mortgage payments, the lender can take ownership of your home as security for the unpaid loan. That means that your home would be foreclosed on. If you want to avoid foreclosure, avoid missing payments on your mortgage. Some states use this document instead of a traditional mortgage. However, most states consider a mortgage your deed of trust without the additional paperwork. Research your state to determine whether or not you should expect to sign a deed of trust instead of the standard mortgage document.
There are many different mortgage documents that you will encounter during the process of buying a home, long before you need to worry about who pays closing costs. In order to feel confident and comfortable in your home buying process, you want to be sure that you know what to expect. You can expect to see and sign the five documents detailed above. These home buying documents include the mortgage application, loan estimate, promissory note, right to cancel and deed of trust documents. Anticipate these documents, and you are sure to be an informed first time home buyer.
