Understanding the homebuying and closing documents

Understanding the purpose and function of the primary documents used during the homebuying process will help you navigate the process more confidently, from the application through closing.

Because these documents are legally binding and will affect your finances going forward, be sure to ask for clarification if something doesn’t make sense. This is your right.

Forms you’ll see prior to closing

Buyer representative agreement: When you engage a real estate agent to help you buy a home, they may ask you to sign a buyer representation agreement, which is a legal document that formalizes your working relationship with your agent.

Uniform Residential Loan Application: This is the mortgage loan application your lender uses to obtain certain personal and financial information to determine whether you qualify for a mortgage. You’ll be required to provide information about your monthly income, household expenses, assets and liabilities, and personal information such as your social security number and marital status.

Loan estimate: A loan estimate reflects all the terms and associated costs with the loan you discussed with your lender. You should receive a loan estimate within three business days of completing your loan application.

Purchase agreement: Once your offer to purchase a home is accepted by the seller, a purchase agreement is drawn up. The agreement includes all details about the transaction, including the names of the buyers and sellers, total purchase price, commission payable to the real estate agent, and requested closing date. You’ll use the purchase agreement to secure financing from a lender and submit the agreement as part of the closing paperwork.

The most important forms you'll sign at closing

Closing disclosure: This form provides the actual fees, costs and credits associated with closing your loan. Your lender is required to provide you with the closing disclosure three business days before your scheduled closing, giving you time to review it and ensure the loan terms and costs closely align with those provided in your loan estimate.

Promissory note: This is the legal document you sign agreeing to repay your home loan according to the terms. It outlines the details of the loan, the dates you need to make payments and where to send payments. It also explains what can happen if you fail to make a payment on time.

Deed of trust: By signing this document, you are giving the lender the right to take back the property by foreclosure if you fail to repay your loan as agreed. This document also explains your rights and responsibilities as a borrower.

Deed: The seller will sign the deed to transfer ownership of the property over to you, and the deed will have the names of all the buyers on it. Your title will be held by a third-party trustee until you have paid for the house in full. You will receive a copy of the deed at closing.

Affidavits and declarations: These are statements declaring all the information you provide is true, including that the property will be your primary residence and all repairs needed on the property were made prior to closing.

Once all the closing documents are signed, the property is legally transferred to you and you are given the keys to your new home.