Financing Your Build / Closing Out Loans

Finalizing Loan Documents

Finalizing loan documents is an essential part of the mortgage process, ensuring that the terms and conditions of the loan are properly documented, agreed upon, and legally binding. This process protects both the borrower and the lender and helps to ensure a smooth closing. Here's what you need to know about finalizing loan documents:

Preparing Loan Documents

Before you can finalize your loan documents, your lender will prepare a set of documents that outline the details of your loan agreement. These documents typically include:

  1. Promissory Note: This document serves as your written promise to repay the loan. It specifies the loan amount, interest rate, repayment terms, and any penalties or fees associated with late payments or default.
  2. Deed of Trust or Mortgage: This document secures the loan by placing a lien on the property, making it collateral for the loan. It outlines the rights and responsibilities of both parties and describes the steps the lender can take in case of default.
  3. Truth-in-Lending Disclosure (TIL): This document provides a summary of the key terms and costs associated with the loan, including the annual percentage rate (APR), finance charges, and other fees.
  4. Loan Estimate: This document provides an itemized list of all the estimated costs associated with the loan, including closing costs, prepaid items, and other fees.

Reviewing Loan Documents

Before signing the final loan documents, it's essential to carefully review each document to ensure that the terms and conditions match what was agreed upon during the loan application and approval process. It's also a good idea to have your attorney or a trusted financial advisor review the documents on your behalf.

Signing Loan Documents

Once you've reviewed the loan documents and confirmed that everything is accurate and complete, you'll need to sign them, typically in the presence of a notary public. The notary will verify your identity, witness your signature, and affix their notarial seal to the documents.

Submitting Loan Documents

After signing the loan documents, your attorney, escrow agent, or title company will submit them to the lender for final review and approval. The lender will verify that all required documents have been properly signed and notarized and that any conditions or contingencies have been met.

Funding the Loan

Once the lender has approved the final loan documents, they'll disburse the loan funds, typically by wiring the money to the escrow or title company. The escrow or title company will then distribute the funds as needed to pay off any existing liens, cover closing costs, and transfer the remaining funds to the seller.

Recording the Mortgage

Finally, the deed of trust or mortgage document will be recorded with the county recorder's office, officially establishing the lender's lien on the property and making the loan agreement part of the public record.

Finalizing your loan documents is a crucial step in securing your mortgage and protecting your rights and interests as a borrower. Be sure to carefully review each document and work closely with your lender, attorney, and escrow or title company to ensure a smooth and successful closing.

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Recording Mortgage Documents