Promissory Note

The promissory note is the legal document you sign agreeing to pay your mortgage and details all of the information regarding your loan. This includes the amount you owe, payment dates, interest rate of your loan, and where you should be sending your payments. Be sure to look over this form carefully. If you notice something in the form that is different from what was initially agreed upon, contact your lender immediately. Each form should include the following: 

• Total amount of money you are borrowing
• Interest rate - if you have an adjustable rate mortgage, look for your initial interest rate
• Consequences of being late on your monthly payment
• If you have an Adjustable Rate Mortgage (ARM), you will also find an explanation for how your interest rate can change

Mortgage/Security Instrument

This closing form takes on a handful of names and may be called the Mortgage, Security Instrument, or Deed of Trust. By signing this form, you are giving your lender permission to take your property via foreclosure if you fail to pay your mortgage according to the terms that you have both agreed to. This form restates the basic information from the promissory note and explains your rights and responsibilities as a borrower. When reading through this form, it should include: 

• Occupancy- The occupancy section states if and when you will need to occupy the property as your principal residence. If you do not move in and continue to live on the property according to the terms of the agreement, you could risk foreclosure. 
• Hazardous Substances - This section states that you are not allowed to store hazardous materials in your home. If you do so, you could risk foreclosure for violating the terms of your loan. 
• Acceleration - The acceleration section says that if you fail to pay your mortgage on time, or fail to follow other conditions of your loan, you could be declared in default of your loan. In this case, your lender has a right to demand that you pay the entirety of your loan off immediately. If you can't pay this amount, your lender can begin the foreclosure proceedings. 

Initial Escrow Disclosure

The Initial Escrow Disclosure Form gives the details of the specific charges that you will pay into escrow each month as part of your mortgage agreement. Each of the forms should include the following:

• A breakdown of your monthly payment which includes your payment on the principal, interest on your loan, and extra money that is put into escrow for upcoming tax and insurance bills. 
• The next section shows how your escrow money will be spent. Each line includes your monthly escrow payment, any withdrawals to pay taxes and insurance, and the running balance that is held in the account. It's important to note that anything that is paid out of your escrow account is not paid separately.

There may be other forms that you see in your process, as each home-buyer's experience is unique. But generally, these will be the closing forms you see. If you need additional help interpreting these forms or would like to speak to one of our lenders, schedule an appointment! You can also download our guide to everything you need to know about the mortgage process.