We have seen it happen before. Someone is so excited to finally close on a condo in downtown San Diego. They have just a few days of waiting before the keys will belong to them. Then, they miss signing one of the documents. The day of his or her dreams turned into a nightmare because of one legal error. That’s why knowing all of the necessary mortgage documents is essential. While at Buy, Sell, Rent San Diego, we work you through all of the paperwork step-by-step, this is not the case with all real estate companies. That’s why we created a list of all the most important documents one needs to sign during the closing of a condo in downtown San Diego.
TRID Compliant forms
Two main regulations were created to protect the consumer financing a home the U.S. from fee abuses, the Truth In Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). These two laws gave birth to the TILA-RESPA Integrated Disclosure Rule (TRID) which makes understanding mortgages easier for the buyers.
The two TRID compliant forms are:
The Loan Estimates
- The loan estimates replaced the Truth in Lending disclosure and the Good Faith Estimates.
- The seller must provide it to the buyer within three days of the loan application. The name aptly conveys what it holds within – the projected loan terms, predicted payments over the life of your mortgage, monthly mortgage payment amount and line item closing costs.
- This aids the buyer to compare various loan options, eventually leading them to decide if the property is the best suited for him or her.
The Closing Disclosure
- The closing disclosure replaced the Final Settlement Statement, a.k.a. HUD or HUD-1.
- The seller must provide it to the buyer at least three days before the closing date.
- Although it contains the same information as the loan estimates, it digs a bit deeper. It displays a breakdown of costs borne by the buyer, seller, and third parties.
- The closing disclosure aids the buyer to cross verify and digest the final terms in the same format as in the loan estimate.
It is important to note that the Deed of Trust is a subset of the Promissory Note.
The Promissory Note
- This is the actual loan contract, a.k.a. the note.
- It specifies the contract term (ex. 5-year Arm or 30 years fixed), payment intervals, interest and penalty rates.
- It also provides the authority to seize the residence in the event of loan default.
- The note has a reference to a separate document i.e. the Deed of Trust.
The Deed of Trust
- This pledges the property to a trustee who holds it as debt or loan.
- According to the loan you choose, you would need to comply with one of the three terms of residence:
- Owner-occupied: It can be used as a rental or second home only after you have lived in there for a year
- Second home: You cannot rent this home. It can only be used as a second home.
- Rental: You are free to convert this to owner-occupied or second home if you wish. However, this right comes with a price of higher loan rate.
The technical jargon can make document signing a little complicated. Luckily, we are here for you. As real estate experts, we walk all of our clients through the mortgage processes, explaining each signature line as we go. If you are planning to buy a condo in downtown San Diego but not sure where to start, contact Claudette Cooper at 619-825-1974 today for a free consultation!