Updated: Sep 5
As a loan signing agent, your role in the loan closing process is crucial. You serve as the intermediary between the borrower and the lender, ensuring that all necessary documents are properly executed. To excel in this role, it is vital to have a thorough understanding of the essential documents involved in a loan closing. In this blog post, we will outline the most important documents you will encounter
as a loan signing agent.
1. Loan Application
The loan application is the initial document that borrowers complete to request a loan. It includes information about the borrower's financial history, income, employment, and the purpose of the loan. This document sets the foundation for the loan process and provides key details for the lender's evaluation.
2. Promissory Note
The promissory note is a legally binding document that outlines the borrower's promise to repay the loan. It includes information such as the loan amount, interest rate, repayment terms, and consequences for defaulting on the loan. This document is critical as it establishes the borrower's obligations and the terms of repayment.
3. Deed of Trust (or Mortgage)
The deed of trust, also known as a mortgage in some states, is a document that secures the loan against the borrower's property. It gives the lender the right to foreclose on the property in the event of non-payment. The deed of trust outlines the borrower's rights and responsibilities regarding the property, and it is recorded in the public records to establish the lender's lien on the property.
4. Closing Disclosure
The Closing Disclosure is a detailed statement that outlines the final loan terms, including the loan amount, interest rate, closing costs, and any other fees associated with the loan. It provides borrowers with a breakdown of their financial obligations and enables them to compare the terms with the initial Loan Estimate they received during the loan application process.
5. Truth in Lending Act (TILA) Disclosure
The TILA disclosure, also known as the Loan Estimate, provides borrowers with important information about the costs and terms of their loan. It includes details such as the loan amount, interest rate, estimated monthly payments, and the total cost of the loan over its lifetime. The TILA disclosure helps borrowers understand the financial implications of the loan and make informed decisions.
6. Affidavit of Occupancy
The affidavit of occupancy certifies that the borrower intends to occupy the property as their primary residence. It is typically required for certain types of loans, such as those insured by the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). This document confirms the borrower's intent to fulfill occupancy requirements associated with the loan.
7. Notice of Right to Cancel
The Notice of Right to Cancel provides borrowers with a specified period to reconsider their decision and cancel the loan transaction without penalty. This document is applicable to certain types of loans, such as refinances or home equity lines of credit. It outlines the timeframe within which borrowers can exercise their right to cancel the loan.
As a loan signing agent, you play a pivotal role in the loan closing process. Familiarizing yourself with the essential documents involved in a loan closing is essential to ensure a smooth and successful transaction. The loan application, promissory note, deed of trust, Closing Disclosure, TILA disclosure, affidavit of occupancy, and Notice of Right to Cancel are among the most important documents you will encounter. By understanding the purpose, significance, and execution requirements of these documents, you can confidently guide borrowers through the loan closing process and contribute to a seamless and efficient transaction.
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