Understanding the Mortgage Process: A Close-up Look at Costs
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You may have submitted your mortgage application (congrats!), but don’t bid farewell to mortgage-related paperwork just yet. Be on the lookout for these two documents from your loan officer, which will help you understand the true cost of your home loan:
1. Loan Estimate
The scoop: This three page document—which replaced the Truth-in-Lending statement and the Good Faith Estimate in October 2015—provides an estimate of your mortgage loan terms (think initial loan amount, interest rate and monthly payment) and your closing costs. It’ll also outline what services you help shop for, versus those you cannot.
The timing: Three business days after your mortgage application has been received by your lender
Tip: This is the right time to talk to your loan officer if you need to change any loan terms or have questions about your loan fees.
2. Closing Disclosure
The scoop: This document serves as your overview of the closing terms and costs necessary to complete your mortgage transaction, and can be leveraged to identify any costs that have changed from your Loan Estimate. The document replaced both the Truth-in-Lending statement and the HUD-1 Settlement Statement.
The timing: At least three business days before closing
Tip: Carefully review your Closing Disclosure so you know how much cash you’ll need on hand for closing day.
By taking the time to review and understand your mortgage documents, you’ll be ready to close with confidence.
This content is educational in nature and is not an advertisement for a loan or business solicitation. It does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.