4 Critical Mortgage Documents You’ll Sign—And What they Actually Mean

If you’re in the process of securing a mortgage, you’re probably well aware of the fact that your writing hand is about to get a lot of exercise—there are many papers to sign.

Of course it’s all worth it in the end, when you’ve got a brand new home and a mortgage to call your own. But until that day comes, it’s important to understand what it is you’ll actually be signing. So when the loan is approved and the keys are in sight, here are four of the most important documents you’ll be putting your signature on.

mortgage signature photo
Photo by Internet Archive Book Images

1) Promissory Note

Also known as “the note,” this is the official document that lists the terms of your loan and acts as the contract between you and your lender. It details your rate, the terms of your loan (i.e. 15-year fixed), and any predetermined payment changes. It also spells out penalties that will occur, such as prepayment charges.

2) Security for the Note

Depending on the state in which you live, you will sign either a mortgage or a deed of trust (in Massachusetts it’s a mortgage). Either way, this document acts as security for the note, giving the lender of your loan the right to take your property—through foreclosure—should you fail to pay your loan based on the agreed upon terms. Simply put, it states that if you don’t pay, your home belongs to your lender.

3) Deed

This is the fun part: the deed officially transfers ownership of the property to you. It contains your name and the names of the previous owner(s) along with a legal description of the property, and will be signed by you and the previous owner(s). Your closing agent will then record and file the document with your county’s public records, after which you will receive a copy.

4) Settlement Statement

This document, known by several different names, such as “the HUD” or “HUD-1”, basically spells it all out for you. It discloses and clearly presents all of the itemized fees you are paying. After showing the total transaction summary, it will detail each fee, including lender fees, title fees, homeowner’s insurance, and any additional fees, such as specific inspections and HOA move-in fees.

Once you’ve signed all of these papers (and your fingers are numb), it’s time to pop the bubbly—you are officially a homeowner.

If you’re buying or selling a home in the Boston area and are in need of a mortgage, or have any mortgage-related questions, contact me anytime for help or advice.

Phil Ganz (117 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317

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