Four Most Important Loan Documents When Signing For Your Refinance
By Alex Haiek
Most sets of loan documents can be overwhelming and may be up to one inch thick. Even loan professionals that refinance their own homes will not read every page. Outside of the three day rescission the first three mentioned can apply to a set of purchase loan documents as well.
Therefore it is important to keep the main thing the main thing. At loan signing, your four most important documents you should be aware of for a residential home loan refinance are the following:
1. The promissory note
2. The grant deed
3. The good-faith estimate (closing costs estimate)
4. Three-day right of rescission
Promissory Note
Review your promissory note very diligently, this is your most important document that you will be signing for the following reasons. This document highlights the rate and terms of your loan, the legal ramifications of the lender that will take place in case you default as well as prepay penalties associated with your loan if there is a prepayment penalty.
Grant deed
A document that states the owner(s) names, entity name, as well as title vesting. Be sure that the names of those that are to be on the loan(s) are showing as well as how you instructed your title vesting to appear (joint tenancy, community property) etc.
Good-faith estimate
A breakdown of all the fees associated with your loan. This should be closer to the final third party non-recurring fees that will be charged as well as recurring fees. This is not the final closing cost breakdown though. You will not receive this until your loan has funded and recorded and will be mailed to you from the closing agent such as an escrow/title company.
Three-day right of rescission
This only pertains to owner occupied refinances and is the least important of the four documents but still worthy to note. On owner occupied refinances you have a three day right of rescission, which is the right to cancel your loan within 72 hours from signing your loan documents if you choose that it is not in your best interest to complete the loan. This is your last and final safeguard to opt out of your loan. In case you want to rescind your loan, it is expedient to call the escrow/title company as well as your loan professional and demand it in writing via fax. Request the rescission confirmation be sent to you as well in writing from escrow.
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