The amount of paperwork that needs your attention when purchasing a condo for sale in San Francisco can quickly become overwhelming. When you add a mortgage into the mix there is even more. The Consumer Financial Protection Bureau (CFPB) works to protect consumers from closing cost abuse and to stop housing service providers from paying each other fees for referrals. This means your lender cannot pay your real estate agent a fee for referring them.
In October of 2015, CFPB made changes to the law that changed the documentation that you are required to sign when obtaining a mortgage for a condo for sale in San Francisco. Understanding what each document is will help you feel less overwhelmed throughout the process.
The Loan Estimate is a document that your lender is required to provide you within three days of applying for a mortgage. This form replaces the previously used Truth in Lending Act and Good Faith Estimate. It spells out the details of the terms of the loan such as projected payment amounts and a detailed list of closing costs.
When you are ready to close on your loan for a condo for sale in San Francisco, you will be provided with a Closing Disclosure at least three days before your closing. This document replaces the previously used Financial Settlement Statement (also called the HUD or HUD-1). The document shows you a detailed split of what the buyer is paying verse what the seller is paying during closing.
You are looking over the final terms of the loan and it will look similar to the Loan Estimate. If you are comfortable with the terms after the three day waiting period, you will move forward with signing all of the loan documents at closing. If you have any questions on the form, contact your lender immediately.
The Promissory Note is also known as simply “the note.” This is the actual contract between you and your lender. All details of the loan are included on the Promissory Note. This is the document you sign agreeing to the terms of the loan. Included on the note will be the term of the loan, amount of the loan, type of loan (5-year ARM or 30-year fixed), rate, payment dates and any prepayment details.
The Promissory Note is also where it is documented that your home is collateral for the loan. That means the lender can take possession of your property if you do not pay according to the terms of the note.
Mortgage / Deed of Trust
The Security Instruments differ from state to state, but both accomplish the same tasks. Your mortgage or deed of trust will set rules that you need to follow:
Understanding the documents that you are receiving at and prior to closing will help you to understand what your requirements are for your loan. It will also help you to know where to find the details of your note and what questions you want to confirm with the lender at closing. Familiarize yourself with the mortgage documents so your closing on a condo for sale in San Francisco can be a smooth one with no surprises.