There’s one last step before you secure your home: signing contracts. Don’t sign anything without reading and understanding everything. It’s a good idea to review these papers with your real estate agent or real estate attorney.

Common Contracts

• HUD-1 Form: This lists each payment made by the people involved in the transaction. It is related to the RESPA form below.
• Real Estate Settlement Procedures Act (RESPA): This shows that you understand how the closing process works, and you are aware of all the closing documents and financial responsibilities of your mortgage.
• Mortgage Note: This is your promise to repay the mortgage. It explains the terms for the loan, including:
  • loan amount
  • interest rate
  • mailing address for payments
  • mortgage’s maturity date (when you will pay off your loan)
  • amortization schedule
  • change dates for interest rates (if you have an adjustable rate mortgage)
• Security Instrument: This “deed of trust” (in California and most Western states) secures your loan by placing a lien on the property. This means that your home can be foreclosed on by your lender if you don’t pay, according to your mortgage note.
• Truth in Lending Disclosure Statement (TIL): This is a final statement where lenders have to disclose all of the terms and conditions of the loan. It includes any corrections to the Truth in Lending Disclosure agreement you received when you first applied for the loan.
• Warranty Deed: The actual legal document that transfers the property title from the seller to the buyer. The seller is called the grantor and the buyer is the grantee.

Depending on where you buy, local laws may require additional documents in the closing process. Other common documents are:

• Mortgage Payment Adjustments: Your lender will send you a statement with the amount you owe for each billing cycle. This amount could change depending on the local property tax rate. If the local property tax rate or insurance rises, for example, the payment may increase to keep sufficient funds in the escrow account.
• Servicing Transfer Statement: If your original lender transfers your loan to another lender, you will receive this document. It just means you’re paying the same loan to a different lender.
• Homeowner’s Association Fees: If you purchased a property that is part of a Homeowner’s Association (HOA), you must inform them that you are the new property owner. This often requires you to pay a fee that is collected monthly or quarterly and covers things such as maintenance of common areas, snow removal, trash pickup and use of community facilities.