Your Mortgage Closing Disclosure Explained

Florida first-time homebuyers are likely to feel ecstatic about the purchase of their home. They likely can’t wait to take the keys and walk inside. 

Buying a home is one of life’s most exciting experiences. It gives you a place you can call your own. However, the home buying process can be quite complicated, especially when you’re handling it for the first time. One document that home buyers should make sure that they fully understand is the mortgage closing disclosure.

What Is the Mortgage Closing Disclosure?

A mortgage closing disclosure is a document that is required to be given to home buyers before the final closing. The best mortgage brokers in Florida are required to give you a copy. The document is usually five pages long and includes important information about the loan, such as the interest rate, the loan type, the term, and closing costs. 

The mortgage closing disclosure is intended to make sure that the buyer understands exactly what they agree to before the final close of the home sale. When the mortgage broker gives you a copy of the closing disclosure, you’ll have three business days before the loan is finalized. 

This period gives the buyer time to review the terms and ask questions if they don’t understand something about the loan. 

What’s Included in the Mortgage Closing Disclosure?

Each page of the closing disclosure contains important information about the loan. 

Page 1

Page 1 is essentially a summary of the terms of your mortgage loan. It includes the transaction date and the names of all of the parties involved in the sale of the home, including the borrower, the seller, the lender, and the settlement agent. 

It will also list the type of loan you are getting as well as how much you are borrowing to purchase the home.

In some cases, you’ll be required to pay for homeowners’ insurance and property taxes. These may be included as part of your monthly mortgage payment. Finally, the total amount of closing costs will be indicated.

Page 2

The second page of your mortgage disclosure is devoted to loan costs. These will include your loan origination charges, your application fee, and your underwriting fee. All other costs associated with your loan, such as title insurance and the appraisal fee, are listed. In some cases, there may be HOA fees included on page 2.

Page 3

The third page shows the cash payments and amounts you’ll need to close. There may be differences between the loan estimate and closing disclosure amounts. If so, reasons for the variances will be indicated. This page will also list your down payment and earnest money payment that will be applied towards your mortgage loan.

Page 4

Page four indicates whether your loan is assumable. An assumable loan may be passed on to the next owner without them needing to apply for a new loan on their own. In most cases, loans are not assumable unless they are Veterans Administration loans.

This page also includes details regarding late fees, negative amortization, and partial payments. Late fees will apply if you are late on your mortgage payment. If you are unable to make your full mortgage payment, you may be able to partially pay your monthly bill if your lender allows it.

Page 5

The last page shows the total amount that you’ll pay in principal and interest over the term of your loan. It will also advise on what happens if you are unable to pay your mortgage balance for any reason and the lender forecloses on the property. Contact information for the lender will be listed.

Takeaways for First Time Home Buyers in Florida

Buying a home is an exciting experience and likely one of the most important purchases you’ll make in your life. However, before agreeing to take on the loan, make sure you understand how it will impact you financially. Doing so can prevent potential problems in the future.

Disclaimer: The opinions expressed above are meant for illustrative purposes only. For specific questions about mortgages or your lending needs, please contact Arco Financial Some restrictions apply. NMLS # 2149692