Blog

Review Your Closing Documents or Go to Jail!


There are many things to look out when you review your closing documents when buying a home but could you actually go to jail if you aren’t paying attention to what you sign?

Not reading or claiming you didn’t understand the reams of disclosures and forms you signed when you bought your home is hardly a great defense in court. So, yes while it may seem easier to just sign the bottom of every page to get it over with, failure to review your closing documents could land you in all sorts of trouble.

For a start you must be careful to review and understand the HUD 1 Settlement Statement. This breaks down all the costs involved in buying your home and whether money is being collected in escrow for your tax and insurance payments. Don’t be afraid to ask questions. There are lots of lines and it can be extremely confusing, especially for the first time homebuyer. The closing attorney or title agency rep should be more than happy to explain things ad review them with you as many times as you need them to.

It should go without saying but you also need to review your interest rate, payments and confirm the first payment due date. Miss your first payment and you will find yourself in big trouble. Unfortunately it is not uncommon for lenders to switch borrowers to higher rates or add on additional fees at the last minute. This is illegal without the proper notifications. Be making sure you still have plenty of time before you actually ‘need’ to close you can avoid being pressured into a loan which will financially cripple you later.

However, the most important document to review is your loan application. The final loan application signed at closing can easily hold typos or changes made by unscrupulous lenders trying to make your application more attractive for selling on. However, it is a federal crime to lie on a loan application. If something doesn’t look right make them change it or you could really face time behind bars or at least find your loan called due early if it is caught later.

[fbcomments]