THINGS TO CHECK

If you speak with the people who routinely close mortgage loans for borrowers, you will typically hear the same refrain--closing documents for signature are often riddled with errors.

In some respects, it's merely the result of the nature of the business, which sees a huge volume of closings when rates are low, thereby putting enormous stress on the workers who are responsible for assembling the paperwork.

Furthermore, the continuous addition of more and more disclosures to the stack of items requiring signature is becoming almost a joke. Particularly in a government backed loan, you may find yourself signing essentially the same piece of paper in slightly different verbiage over and over again.

Computers don't help. If a particular detail, such as your name, is entered incorrectly into the database or word processing program, it could easily be wrong on all of the dozen or more documents requiring your signature. And depending on the lender, the type of loan and whether or not you are involved in a purchase transaction, you may be faced with signing your name three dozen times.

So, which documents are critical, when it comes to checking for accuracy? The promissory Note is the most important document in the stack, as it lays out the terms of your loan. It is always a good idea to review the HUD settlement statement a day early to verify the arithmetic is correct regarding the various charges on the loan.

If possible, you should seek to obtain an early copy of the Note and the mortgage document. Contrary to popular parlance, you are not "getting" a mortgage. Instead you are "giving" a mortgage to the lender--a lien against your property in exchange for the money to purchase it, or to pay off the old loan, and perhaps a little extra for home improvements, a new car or a student's education.

Due to the critical nature of the Note, you should read every word of what is often a two or three page form. Pay particularly close attention to all items which are unique to your situation, such as the loan amount, the interest rate, the monthly payment amount of principal and interest, the end date of the loan to verify it is a fifteen or thirty year term (depending upon what you requested), and the spelling of your name below the signature line.

In the pre-printed section, determine if you have the right to prepay in whole or in part at any time without a penalty. Also read the default clause and the one about what happens if you change the names on the title to the property without the lender's prior written permission, such as adding or deleting a spouse or other family member. And notice the clause which typically says that if one borrower skips town, the other borrower will be stuck with the entire loan amount due. (Of course, it's not worded quite that way, but you get the idea.) If you don't understand what you are reading, find a real estate attorney to decipher the language for you.

As for the mortgage, it is now often sixteen pages long instead of the previous five pages long. Each state has its own form, which is often listed in the lower left corner. The document has been tripled in length to make it easier for the average person to read. The key is to make sure all the parts which have been filled in are accurate, with your names being spelled correctly and the loan amount being on target along with the length of the loan. It's also a big plus if the address of your property is correct and matches the Note's address and date of the loan.

The chances are good that if the settlement statement, the Note and the mortgage are in good order, the rest of the package for signature at closing will be in the ballpark. But bring your eagle eyes (and perhaps a pair of glasses) just to make sure!

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