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Closing Disclosure Forms 101: A Guide to Mortgage Closing Documents in Florida

Posted by Jane F. Bolin, Esq. | Dec 14, 2022 | 0 Comments

Your closing disclosure forms explain the details of your home loan, so there aren't any surprises.

Key Takeaways:

  • Closing disclosure forms are required by federal law
  • They put the loan's essential information into more straightforward language
  • The paperwork is split into five pages
  • Understanding the data ensures you're aware of what your mortgage entails

There are many steps in purchasing a home, and the entire process can be confusing. Even experienced buyers sometimes require assistance sorting through the paperwork, but closing disclosure forms aim to simplify essential mortgage information.

These closing documents are required by federal law and provide an overview of the loan's key characteristics, including the mortgage type, loan term, interest rate, and closing costs. This information makes it easier to understand what you're getting into before finalizing your mortgage.

The paperwork is spread over five pages, and your lender must provide the documents at least three days before finalizing the loan. Here's a quick closing disclosure forms 101 overview with information on what each page should cover.

Page one – Terms, payments, and closing costs

The first page of closing disclosure forms starts with the loan's terms, including its amount, the interest rate, and the monthly principal and interest. This section also contains information on prepayment penalties and any applicable balloon payments the agreement includes. The goal is to inform the borrower how much money they're receiving and when they must pay it back.

The following section covers projected payments, including monthly payments throughout the years, and how these payments are calculated. Taxes, insurance, and assessments are also part of this information.

Finally, page one includes data on closing costs. The borrower is responsible for paying the lender and the title firm before finalizing the agreement, and the required amounts are in this section.

Page two – Loan and other costs

The document's second page goes deeper into closing costs and other expenses the borrower will have to cover before finalizing the mortgage. The charges include an origination fee, mortgage points, application fee, and underwriting fee. This portion could even contain information on services like property appraisals, credit reports, flood zone certification, surveying, and home inspections.

Page two also goes over other additional costs. These fees might include the initial escrow payment, prepaid taxes, home insurance premiums, interest payments, or mortgage insurance payments. Information on real estate commissions, HOA fees, and title insurance could appear here, too, although they aren't always applicable.

Page three – Cash needed

The third page of your closing disclosure forms will dig deeper into the cash needed to close. This information includes calculations of how much money the buyer needs to finalize the purchase. You can expect to find data on escrow deposits and potential seller credits, which is the amount a seller is willing to put toward the closing costs to help facilitate a deal.

You'll also find a synopsis of these transactions on this page. This summary will list the closing costs the buyer and seller are responsible for and any adjustments these expenses make to forthcoming taxes, association fees, and other costs. This section thoroughly recaps what each party owes before finalizing the transaction.

Page four – Loan disclosures

Page four discusses specific loan disclosures you should know before signing anything. For instance, it mentions whether your mortgage is assumable, which gives the borrower the ability to sell or transfer the property without changing the loan's terms. Most loans aren't assumable, so you'll have to pay the mortgage off before selling the home. 

This section also touches on whether the lender can demand an early repayment of the loan balance, principal, and interest before the mortgage's end date and what happens when there's a late payment. Information on how the lender handles partial payments and negative amortization is enclosed here, too.

Finally, page four will let the borrower know that the lender can sell the property if the borrower defaults on the loan. This information is essential because it spells out what will happen if you don't live up to your end of the agreement as a borrower. 

Page five – Loan calculations and other disclosures

The fifth page starts with a summary of how much the loan will cost the borrower over the mortgage's lifetime. This data includes the total payments, finance charges, and the amount being financed. It also mentions the annual percentage rate and the total interest percentage, which are the monetary amounts of interest the borrower will pay over a year and the life of the loan.

Section five includes a few other disclosures, including general information on the home's appraisal, refinance options, and tax deductions on interest when the amount of the loan is greater than the property's value. It also provides information on the contract's details and liability and foreclosure. 

Finally, section five has contact information on all professional parties the purchase transaction includes. These parties are typically title agents, lenders, and realtors who assist in selling the home. 

Understanding your closing disclosure forms

These closing documents aren't unique to Florida, as federal law requires them whenever a lender is involved in the sale of a home. However, closing disclosure forms make it easier to understand your loan's terms so you can enter into an agreement with as much information as possible. 

Remember that if specific provisions in your loan change before receiving your closing disclosure, your lender will have to provide you with new documents and another three-day review period. It's advisable to seek assistance from a reputable real estate attorney if there's anything you don't understand or if something doesn't seem right on your closing disclosure forms.

PeytonBolin provides real estate transaction assistance in South Florida. Our experienced team of real estate attorneys will help you understand your mortgage closing documents and anything else that's unclear as you purchase a property, putting your mind at ease as you finalize the deal. Contact PeytonBolin for more information on closing disclosure forms.

About the Author

Jane F. Bolin, Esq.

Founding Member, Managing Partner


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