Signing Loan Documents for Our House

I have been watching shows about buying a house on HGTV for the last eight months, and they often show a snippet of the (probably staged) signing. This always involves the borrower(s) wearing nice clothes, going to a bank, and sitting in a very large room with a very attractive conference table with a bunch of other people to sign all the loan documents. I don't know how common this situation is in real life, but my experience with signing loan documents did not resemble this at all.

We signed our loan documents in our apartment on a Saturday. Our real estate agent was not there and neither was our loan officer. The only person there was a notary, who checked two forms of identification (we were not told ahead of time that we would need two forms of ID, so good thing we happened to have them) and gave us each of the 100 or so pages that were part of the loan documents. Then she took everything to FedEx to get it shipped back to the escrow company, which is located about 60 miles away from where I live.

Not all of the 100 pages had to be signed or initialed. For example, the closing instructions, which were several pages long, were there for the benefit of the escrow company, not us. Of course, being the meticulous person I am and this being the biggest financial transaction of my life thus far, I insisted on reading everything, which really meant skimming it because there was just so much, and the whole process still took two hours, which visibly annoyed the notary. Aside from the fact that it's just plain common sense to read anything before you sign it, can we say subprime mortgage crisis? Don't we all have plenty of evidence surrounding us as to why you should understand exactly what you're getting into and make sure there are no significant mistakes in your loan documents?

Our closing is already delayed because one of the many parties involved in this process (not me) is not on top of things (I suspect the escrow company) so I knew going into the signing that there was really no room to get nitpicky over errors in the documents if I wanted things to close on time. This made me nervous, as did the fact that I did not get the loan documents to review in advance, as I requested, nor did I get my HUD-1 24 hours in advance, as is supposedly required by law. (The HUD-1 is the estimated statement of closing costs and other money that must be paid by the borrower, minus any seller credits, for the transaction to close.) I got a couple of good faith estimates, but because my loan officer (according to her) was not able to get numbers on certain items from the escrow company, there were lots of new and different numbers on the HUD-1. Most importantly, it did not show that we had already put down half of our down payment as a deposit. I compared the HUD-1 with the GFE, but it was difficult to compare the two in a short period of time since the two documents look substantially different, the numbers are totaled in different ways, and not all the fee descriptions or amounts are the same. And even the HUD-1 is actually an estimate--you overpay it by, in our case, $400, and then once the transaction is totally complete, you (hopefully) get a refund check in the mail with the final closing statement.

For the most part, I felt that my preparation for buying a home over the last year and a half had prepared me well for our document signing. I understood what almost everything was and I knew what to look for. I made sure the interest rate was correct, that it was a fixed rate, that the loan term was correct, and that there was no prepayment penalty. When I got to the form requesting copies of previous years' tax returns from the IRS, I made sure the form specified which tax form and which years they were asking for so they couldn't fill in the blanks later and ask for any old thing. And I knew to pay attention to every page and not just sign blindly. Of course, paying attention only helps to the extent that you know what you're looking for.

Being that the HUD-1 is only an estimate and can theoretically be updated before any funds are paid, I went ahead and made a detailed spreadsheet that evening to compare it to my GFE. I found a couple of issues, but overall my loan officer did a phenomenal job estimating the closing costs and the amounts were extremely close. However, I am still attempting to get the issues resolved before I fork over any money. For example, the escrow company somehow managed to get the monthly homeowners insurance payment wrong, and not in my favor. Also, the escrow company wants to charge me an email fee of $75, which is just a blatant junk fee. Couldn't they have at least tried to disguise it as something that might actually cost money to do? It doesn't cost $75 to email anything, ever.

I guess the biggest problem with the process is that there were all these little mistakes here and there, and I had to sign off saying the documents were accurate if I wanted to get my loan. The pages with the information used to qualify me, for example, had my last employer's name misspelled, my employment dates off by a couple weeks, things like that. I know those details wouldn't affect whether I qualified for the loan, but I simply don't see why I should have to sign off on something that is untrue. If I had been able to review the docs in advance, I would have been able to correct everything without further delaying the closing and putting the entire transaction in jeopardy. There was also a name affidavit page where I had to sign saying that I was the same person as A. Fontinelle, Amy Fontinelle, and, mysteriously, Ami Fontinelle. Now, I have never in my life, not even during a silly teenage phase, spelled my name Ami, so I have no idea what that's about, yet I have to sign this doc. According to the notary, my name probably appears this way on one of my credit reports. Last time I checked, which was about two months ago, my identity had never been stolen, so I had to assume that this was only a typo. If my last name wasn't so uncommon, though, I probably would have been particularly uncomfortable signing this page. I mean, who knows who Ami Fontinelle could be and how she might handle her finances?

I'll let you know what happens when all is said and done. This was my experience signing loan documents--maybe it will give you some idea of what to expect when it's your turn.

Photo by hortulus

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