What Documents Do You Sign at Refinance Closing?

When refinancing a home, the closing process marks the finalization of your new loan. This stage involves reviewing and signing numerous legal documents that bind you to the new terms. Understanding each document’s purpose is important, as they outline your financial obligations and the lender’s rights. A closing agent, such as a title company representative, typically guides you through the paperwork.

Documents Detailing Loan Terms

At the core of your refinance are documents that legally establish the new loan and use your property as collateral. The Promissory Note is a legal document you sign, representing your promise to repay the loan amount to the lender. This note details the principal sum borrowed, the interest rate, and the repayment schedule. It also outlines the consequences of failing to make timely payments, such as late fees or default.

The lender retains the original Promissory Note until the loan is fully repaid. Unlike other documents, the Promissory Note is not recorded in county land records. When the loan is paid off, the note is marked “paid in full” and returned to you.

Complementing the Promissory Note is the Mortgage or Deed of Trust, which secures the loan by placing a lien on your property. This document grants the lender the right to take back the property through foreclosure if you fail to meet repayment obligations. The Mortgage or Deed of Trust specifies your responsibilities as a borrower regarding the property and the lender’s rights concerning the collateral.

Depending on the state, either a Mortgage or a Deed of Trust will be used. A Deed of Trust involves a third-party trustee who holds the property title until the loan is satisfied. This instrument is recorded in county land records, providing public notice of the lender’s security interest.

Documents Outlining Costs and Payments

A central document detailing financial aspects of your refinance is the Closing Disclosure (CD). This five-page form provides a summary of your new loan’s final terms, projected monthly payments, and all closing costs. Lenders must provide the Closing Disclosure at least three business days before your scheduled closing. This three-day period allows you to review the final terms and compare them against the initial Loan Estimate.

The Closing Disclosure includes itemized lists of all fees, credits, and costs associated with your refinance. It details the loan amount, interest rate, and a breakdown of your monthly payments, including principal, interest, and any escrow amounts. Any discrepancies or significant changes from your Loan Estimate should be questioned and clarified with your lender before signing, as the terms become binding once you sign the CD. The document also informs you of the exact amount you will need to pay at closing, if any, and the total cost of the mortgage over its term.

Supporting Legal and Compliance Documents

Beyond the core loan agreements and financial disclosures, several other documents are signed at closing to ensure the legality, compliance, and accuracy of the transaction. An Occupancy Affidavit is often included, where you attest that the refinanced property will serve as your primary residence. This is significant because lenders often offer lower interest rates for owner-occupied properties due to perceived lower risk. This affidavit also confirms the property’s classification and its compliance with relevant standards.

Various other affidavits and declarations may be presented, requiring your signature to confirm facts or verify information provided during the loan application process. These sworn statements are legally binding and ensure that all information is true and accurate. Additionally, “riders” are common addendums to the mortgage or deed of trust, used when the loan has non-standard features. Examples include adjustable-rate riders for loans with variable interest rates, or planned unit development (PUD) riders for properties in communities with homeowner associations.

An Initial Escrow Statement details the setup of your escrow account, outlining the specific charges you will pay into it monthly for property taxes and homeowner’s insurance. For refinances, you will also receive a Notice of Right to Cancel, also known as the right of rescission. This document informs you of your right to cancel the loan agreement within three business days after signing the credit contract and receiving the Closing Disclosure.