Closing Documents Overview
During the real estate closing, both the buyer and the seller are required to sign many documents.
The following is a list and brief explanation of most of the documents.
HUD-1 Settlement Statement: This is a detailed itemization of the financial aspects of the transaction. It contains real estate and loan costs as well as tax proration, homeowners’ dues and insurances. Signed by the buyer and seller.
The Deed: This transfers title of the property from the seller to the buyer. (If purchasing a cooperative, you
will receive a stock certificate and proprietary lease instead of a deed.) Signed by the seller.
Note: This states the borrowing term. It is the agreement between the buyer and lender. In effect it is an IOU. Signed by the buyer.
This shows a lien is placed on the property and that the lender may foreclose if the borrower fails to make payments. Signed by the buyer.
Regulation Z/Truth in Lending Statement: This document discloses the amount financed, interest rate, the annual interest rate and the total cost of the loan over its life. Signed by the buyer.
Financed Itemization: This explains the prepaid financed costs that are subtracted from the total loan amount, which are on the Truth in Lending Statement. Signed by the buyer.
Payment Letter: This shows the monthly payment. Signed by the buyer.
Lender's Title Insurance Notice: This lets the buyer know that the lender’s title insurance protects only the lender. Signed by the buyer.
Anti Coercion Form: This requires buyers to state that they have not been pressured to buy hazard insurance from a particular company. Signed by the buyer.
Proration Agreement: This states that the buyer and seller will reprorate the taxes and homeowners’ dues if there is a change in these amounts. Signed by the buyer and seller.
Buyer's Affidavit: This states that the information on the loan application is still true and correct. Signed by the buyer.
Seller's Affidavit: This requires the seller to state he/she has not altered the property in any way that might cloud
the title. Signed by the seller.
Payoff Confirmation: A report of where money is being paid in order to satisfy and redeem liens against the property. Signed by the seller.
FIRPTA Document: This advises the buyer that if the seller is a foreigner and leaves the country without paying income taxes due because of the transaction, the buyer is liable. Signed by the buyer.
Compliance Agreement: This mutual agreement requires the buyer and the seller to cooperate, sign, and correct any unintentional typographical errors on any of the closing documents. Signed by the buyer and seller.
Mortgage Servicing Disclosure Statement: This discloses whether the lender intends to service the loan or transfer it to another lender. Signed by buyer.
