Understanding Your Mortgage Closing Disclosure in Michigan

When purchasing a home in Michigan, one of the critical documents you’ll encounter is the Mortgage Closing Disclosure (CD). This document provides detailed information about your mortgage loan, including the terms, costs, and projected payments. Understanding your Mortgage Closing Disclosure is essential to ensure you are fully informed before finalizing your home purchase.

The Mortgage Closing Disclosure is a five-page document that replaces the older Good Faith Estimate. It is designed to give borrowers clarity about their mortgage terms. By law, lenders are required to provide this document at least three days before closing, allowing you time to review and ask questions about any discrepancies or concerns.

Key Sections of the Closing Disclosure

There are several key sections in the Mortgage Closing Disclosure that you will need to review carefully:

1. Loan Terms

This section outlines the loan amount, interest rate, monthly payment, and whether you will be required to make any prepayments. It’s crucial to understand these terms, as they will impact your monthly budget and overall financial planning.

2. Projected Payments

Here, you will find how much your monthly payments will be, including principal and interest, property taxes, homeowners insurance, and mortgage insurance, if applicable. Pay attention to this section as it gives you a clear picture of what to expect each month.

3. Costs at Closing

This section breaks down the costs associated with closing on your mortgage. It includes items such as loan origination fees, title insurance, and any other applicable charges. It’s crucial to compare these costs to your Loan Estimate received earlier in the process to ensure they align.

4. Other Costs

This section may contain additional costs such as homeowners association fees or prepaid items like property taxes and homeowners insurance. Understanding these expenses is vital for accurate budgeting before settling into your new home.

5. Cash to Close

The final cash to close section specifies the exact amount you will need to provide at closing. This will include your down payment and any closing costs not covered by the loan. Ensure this figure matches your expectations to avoid any last-minute surprises.

Understanding Fees and Charges

Lastly, familiarize yourself with the various fees listed on the Closing Disclosure. Common fees can include:

• Origination Fees: Charged by the lender for processing the mortgage application.
• Application Fees: Covered by the borrower when applying for the mortgage.
• Title Insurance: Protects against any claims on the property’s title.
• Escrow Fees: Costs associated with the management of your taxes and insurance.

Common Pitfalls to Avoid

When reviewing your Mortgage Closing Disclosure, avoid the following pitfalls:

• Rushing the Review: Take your time to thoroughly read through the document.
• Ignoring Discrepancies: If you find anything that doesn’t match your expectations or previous estimates, reach out to your lender immediately.
• Neglecting Questions: Don’t hesitate to ask your lender or real estate agent for clarification on any terms or fees that are unclear.

Understanding your Mortgage Closing Disclosure is a pivotal step in the home-buying process in Michigan. By carefully reviewing each section, being aware of potential fees, and asking questions, you can navigate your closing day confidently and ensure that you are making informed financial decisions regarding your new home.