A mortgage loan is likely one of the biggest debts you will take on in your life. It is surprising how many people sign the mortgage documents without fully understanding all of the terms of the loan and of expected repayment. As of 2015, the Consumer Financial Protection Bureau enacted a requirement for lenders to present all potential borrowers with specific forms called closing disclosures.
If you are about to close on a property, you should receive closing disclosures at least three days before you are set to close. This gives you time to carefully review the terms set out in the disclosures to make sure you understand and agree to all the terms of the loan.
Even if you received a loan estimate earlier in the real estate-buying process, this does not necessarily mean that the final documents have the same terms. This is especially true if your interest rate was not locked in at the time of the loan estimate. There will be a lot of information in this five-page disclosure, including the following:
- Page 1 – Loan amount, interest rate, whether the rate is adjustable or fixed, penalties for prepayment, whether the loan is a balloon loan, a breakdown of the monthly payment, and escrow information.
- Page 2 – Closing costs, fees to the lenders, and whether you must pay points on the mortgage.
- Page 3 – The amount of cash you will need to close on the loan, as well as the summary of the overall transaction.
- Page 4 – Penalties for late payments and whether you can make partial payments if needed.
- Page 5 – Overall loan calculation, additional disclosures, and details about the mortgage lender.
Even with all of this information in front of you, it can be difficult to understand some of the financial terms. It is always a wise idea to go over your closing disclosure with an experienced real estate attorney as soon as you receive them.
Call 201-498-9768 today for more information.
The home-buying process is complicated and can involve a lot of legal jargon and complex financial terms. However, even the slightest mistake can cost you a significant amount of money and can even affect your credit. At the Law Office of John L. Schettino, we represent the rights and interests of home buyers through every step of the real estate transaction to minimize the chances of complications along the way. If you are buying real estate, please contact our New Jersey real estate lawyer for assistance today.