A major part of the closing process on your Northeast Florida home includes finalizing your funding. Smart home buyers start the funding process as early as possible…sometimes even before they start looking at properties. That’s because this might take a little time. Your lender provides you with a Loan Estimate within three days of your application for a home loan. This details the estimated interest rate, projected monthly payment, estimated closing costs, and your expected taxes and insurance. Within three days of closing, they update this information in a Closing Disclosure form. What is this and what should you do when you receive it?
Closing Disclosure Explained
Now that the closing process is nearing completion, it’s time to finalize all the details of your Northeast Florida home purchase. Unlike the Loan Estimate, your Closing Disclosure provides final details about your loan instead of estimates. Here, you’ll find the total amount of your loan, your actual interest rate, and the monthly principal and interest at the time of signing. It should also tell you whether you incur a prepayment penalty or if a balloon payment is required during the life of the loan. Finally, it discloses your actual closing costs and the amount of cash needed when you sign the final paperwork.
What to Look For
When you receive your Closing Disclosure, review it carefully. Check for any misspellings of your name or address. This is a legal document. It needs to be 100% correct. Make sure the loan terms and interest rate match what you agreed to. It’s a good idea to match this form against your Loan Estimate to see if it differs and by how much. Look at what’s included in your escrow account. This shows what your monthly payment takes care of and what you must pay separately. For example, many lenders include your mortgage principal, interest, taxes, and insurance as part of your escrow account (where your monthly payment goes). Then, each of these gets paid when due through your escrow account. Oftentimes, HOA fees aren’t part of your escrow account. Therefore, they must be paid by you separately. It should say whether or not that is the case on your Closing Disclosure.
Feel free to ask your lender any questions you come up with during this three-day review process. Never sign a document unless you fully understand what you’re signing first. If you need to, write down the questions as they come up so you don’t forget to ask. Don’t wait until the last minute just in case something needs to be changed because changes may create delays in closing. Contact the Welch Team when you’re ready to start looking for your next Northeast Florida home.