* Promissory Note
This is your promise to repay the debt. The note will reflect the loan amount, maturity date, interest rate, and monthly principle and interest payment. The note will also show the late fee and the existence of any prepayment penalty, and state whether or not it is assumable. The note, which represents your personal promise to repay the debt, and the security deed conveying your property as security for that promise, are the two most important documents that you will sign at closing.
* Security Deed
This is the instrument by which you convey to the lender the real property that is the collateral for the mortgage loan. In some instances there will be standard riders which will attach to and become a part of the Security Deed for loans secured by condominiums, property in subdivisions with mandatory homeowners associations, or property being acquired for investment purposes rather than for owner occupancy. Also attached to and becoming part of the Security Deed will be a Waiver of Borrower’s Rights in which you acknowledge that Georgia is a non-judicial foreclosure state and waive your rights to a court procedure if you default on the loan.
At or within three days of your loan application you will receive a document entitled Truth-in-Lending. The purpose of this document is to disclose to you the cost of your credit for the life or term of your loan. This information will be presented to you in two standardized formats:
Finance charge: This figure represents the total cost for borrowing the money, expressed as a dollar amount. It includes principal and interest for the entire term of the loan, origination and discount fees, private mortgage insurance (if required) and certain other costs.
Annual percentage rate (APR): This number expresses the same costs as the Finance Charge, but shows it as an annualized finance charge or percentage. This number will almost always be higher than your note interest rate.
If your loan terms change after the initial disclosure, your lender must re-disclose to you based on the changed terms. You will receive a final disclosure at the closing.
* IRS Form W-9
This is the form used by the lender to verify the borrower’s Social Security number for purposes of reporting to the IRS interest received by the lender.
* IRS Form 4506
This is a form authorizing the lender to request from the IRS a copy of the borrower’s income tax returns for up to four years prior to the closing. This authorization is valid for only sixty days from the date of its execution.
* Errors and Omissions/Compliance Agreement
This is the borrower’s agreement to cooperate with the lender in correcting any clerical errors and mistakes appearing in the loan documentation.
* Affidavit of Occupancy
This is the borrower’s sworn statement that he or she intends to occupy the property as his or her principal residence.
* Name Affidavit
This is an affidavit that includes various forms of the borrower’s name that may appear in the borrower’s credit report. This usually involves a shortened form of the borrower’s name, or the use or omission of a middle name or initial.
* Borrower’s Certification and Authorization
This is the borrower’s certification that all information provided to the lender in processing the loan was true and correct, and authorizing the lender to verify after closing the credit information that the lender has accumulated.
* Loan Servicing Transfer Disclosure
This is documentation required by federal regulations that discloses to the borrower information regarding the lender’s intentions and recent history in transferring servicing of their loans. Lenders are required to notify borrowers any time the servicing of their loan is transferred. This transfer generally has no impact on the borrower other than to change the name of the institution that receives the monthly mortgage payment.
* Flood Zone Documentation
This is documentation disclosing to the borrower whether or not the property being purchased is within a federally designated special flood hazard area. There is also usually an agreement wherein the borrower agrees that, even if the property is not located within a flood hazard area as of the time of closing, the lender can require the borrower to obtain flood insurance at any time during the life of the loan if the flood hazard maps are redrawn and the subject property subsequently lies within a federally designated flood hazard area
While most of the documentation to be signed at the closing is lender-required forms that the borrower signs, there are a few documents that the seller will sign regarding the transfer of the property to the purchaser. The following are examples of documents that the seller will sign in a typical real estate closing:
* Warranty Deed
This is the instrument that transfers the property title from the seller to the purchaser. In a general warranty deed, the seller covenants that he has the right to convey the property, that it is conveyed free and clear of all encumbrances, and that the seller will defend the purchaser from all claims against title. Note that some contracts allow the seller to convey title by a limited or special warranty deed. This form of deed limits the seller’s warranty of title to those matters created or arising out of the seller.
* Owner’s Affidavit
This is the affidavit of the seller that the property is being conveyed free and clear of any liens, claims or judgments, that there has been no work done to the property that has not been paid for, and that there are no tenants in possession of the property.
* Seller’s Affidavit of Residence
This verifies that the seller is a Georgia resident and is not subject to the State of Georgia capital gains tax withholding requirements.
* Seller’s Certificate of Exemption
This is used in conjunction with the previous form when the seller is an out-of-state resident. It verifies the seller’s exemption from state of Georgia capital gains tax withholding.