Understanding refinancing closing documents

Closing on your new loan can be complicated, which is why it’s critical you understand all the paperwork involved.

Fully understanding the purpose and significance of the documents you’ll see at closing will give you confidence at the closing table. It’s important that you read each document thoroughly and talk to your lender if you have any questions or concerns.

The most important forms you’ll sign at closing

Here are several documents you can expect to see at closing:

letter A

Closing disclosure

The closing disclosure 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 to review and ensure that the loan terms and costs align with those provided in your loan estimate.

letter B

Promissory note

The promissory note is the legal document you sign agreeing to repay the loan according to the terms to which you previously agreed. It outlines the details of the loan, the dates when payments are to be made and where payments are to be sent. It also explains what can happen if you fail to make a payment on time.

letter C

Deed of trust

The deed of trust explains your rights and responsibilities as a borrower. It also gives the lender the right to take back the property by foreclosure should you fail to repay your loan as agreed.

This is different from a deed, which is a document that transfers ownership from a seller to a buyer. If you are confirmed as the current property owner and you are not transferring ownership of the property during the refinance, you will likely not receive an updated deed.

letter D

Affidavits and declarations

These are statements declaring all the information you provide is true.

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.