Notaries have become moderately familiar with the new Closing Disclosure. I want to stress some important points about this document that you should memorize. I also added this content to the 30 point course for future reference!
1. The Closing Estimate
Previously there was a document called the Good Faith Estimate whose current replacement would be the Closing Estimate. Although these two documents are not even close to being identical, they go over the estimated costs of the loan among other information.
2. The Truth in Lending
This is now an antiquated document. The Truth in Lending had some bizarre and unhelpful verbiage about the prepayment penalty. It said you, “will, won’t or may” have a prepayment penalty. The Closing Disclosure states if you will or won’t but omits the ambiguous word, “may” from the document.
3. The APR
In addition to going over the APR, there will be a new figure discussed on the Closing disclosure called the TIP which is the total interest percentage.
4. Taxes, Insurance, Escrow Fees
Estimated escrow costs, insurance, taxes, servicing, assumption, and appraisal costs will also be covered in this new and exciting document.
5. The property address
Many loan signing courses claim you should look for the property address on the Deed of Trust or Mortgage. You can, but it is also on the Closing Disclosure on the upper left corner.
6. The Loan Amount & Rate
This is also covered on the upper half of page one.
7. Fees associated with the loan
The Closing Disclosure replaces the TIL and the HUD-1 Settlement Statement. So, items from the Settlement Statement such as fees or costs associated with the loan will be covered on this document.
8. Calculating Cash to Close
This is a very practical section that covers total closing costs, closing costs financeed, down payment, deposit, funds for borrower, seller credits, and adjustments. The bottom line in this section is the cash to close total amount.
9. Summary of Transactions
The sale price of the property, closing costs, HOA dues, deposits, loan amount, sellers credit, rebates, and local taxes are all part of the accounting spreadsheet in this section.
10. The additional information section about the loan
This section covers other specifications about the loan such as whether or not assumption is allowed, if there is a demand feature, negative amortization, late payments, partial payments, escrow accounts, and more…
11. Next, there is a basic loan calculation similar to what the TIL had with the total payments, finance charge, amount financed, APR, and the new figure which is the TIP.
12. There is a section listing other disclosures which will list the appraisal, contract details, liability after foreclosure (keeping it positive), refinance, and tax deductions.
13. And last there is contact information of the Lender, the Real Estate Brokers, and the Settlement Agents.
Applicant Signature Date
Eventually I will create some test questions out of this material. I already have one, but I will derive some others as well.
You might also like:
Ken’s tips for the Closing Disclosure
The 30 point course’s guide to the Closing Disclosure