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When you are buying a house or refinancing a loan, one of the key people you will meet is the loan closing notary. This person plays an essential role in ensuring that the final steps of your loan process are completed properly and legally. While their job may seem straightforward, it is an important part of securing your home loan.
In this article, we will explain what a loan closing notary does, why they are necessary, and what you can expect when you meet with one.
What Is a Loan Closing Notary?
A loan closing notary, also known as a notary signing agent, is a notary public who specializes in overseeing the signing of loan documents during a real estate transaction. They are trained to handle the specific paperwork involved in home loans, mortgages, and refinancing. Their main job is to ensure that the loan documents are signed correctly, that the borrower’s identity is verified, and that everything is done in accordance with the law.
Why Are Loan Closing Notaries Important?
Loan closing notaries play a critical role in the loan process because they help prevent fraud, ensure the proper execution of legal documents, and provide an extra layer of security for both the lender and the borrower.
Here’s why they are important:
- Preventing Fraud: The notary verifies the identities of the signers to ensure that the right people are involved in the transaction. This helps protect against identity theft and fraud.
- Legal Compliance: By ensuring that all signatures are properly placed and witnessed, the notary helps make sure that the loan documents will hold up legally if there are any issues down the road.
- Assisting Borrowers: Loan documents can be confusing, and a notary can guide borrowers through the process, making sure they understand what they are signing and where to sign.
What Happens During a Loan Closing with a Notary?
During a loan closing, the notary will meet with the borrower to go over the loan documents. This usually takes place at a location convenient for the borrower, such as their home, office, or even the lender’s office.
Here is what typically happens during the meeting:
- Document Review: The notary will have a packet of documents related to the loan. They will explain what each document is and where the borrower needs to sign or initial.
- Identity Verification: Before the borrower can sign, the notary will ask for a government-issued ID, such as a driver’s license or passport. This ensures that the borrower is who they claim to be.
- Witnessing Signatures: The notary will watch as the borrower signs the loan documents, ensuring that they are signing willingly and without coercion. This helps protect the borrower’s rights and ensures that the loan agreement is valid.
- Notarization: After the borrower signs the documents, the notary will add their official stamp or seal to certain pages. This stamp certifies that the notary witnessed the signing and that it was done correctly.
What Documents Are Typically Involved?
During a loan closing, several important documents will be signed, and the notary will witness many of these signatures. Here are some of the key documents that may be involved:
- Deed of Trust: This document gives the lender a security interest in the property, meaning the property acts as collateral for the loan.
- Promissory Note: This is the borrower’s written promise to repay the loan according to the terms outlined in the note.
- Closing Disclosure: This document lists all of the costs and fees associated with the loan, including the interest rate, closing costs, and payment schedule.
- Affidavits and Declarations: These are statements made by the borrower that may confirm certain details about their financial situation or the property itself.
The notary will make sure that all of these documents are signed correctly and that any necessary notarizations are completed.
What to Expect After the Loan Closing
Once the loan closing is complete, the notary will return the signed and notarized documents to the lender or title company. These documents are then processed, and the loan can be finalized. In most cases, once the paperwork is reviewed and approved, the funds for the loan will be released.
It’s important to note that even after you’ve signed everything, there may be a short waiting period (usually three days) before the loan is fully funded. This is known as the “right of rescission” period, which gives borrowers time to back out of the loan if they change their mind.
How to Prepare for Your Loan Closing
If you’re getting ready for a loan closing, here are a few tips to help you prepare:
- Review the Documents Ahead of Time: If possible, ask your lender for copies of the loan documents before the closing. This gives you time to read through them carefully and ask any questions you may have.
- Bring Proper Identification: Make sure you have a valid, government-issued photo ID ready for the notary to check. Without it, the notary cannot complete the loan closing.
- Know What You’re Signing: Make sure you understand the terms of your loan, including your interest rate, monthly payments, and any fees involved. If something doesn’t seem right, ask questions before signing.
Conclusion
A loan closing notary plays an essential role in the home buying and refinancing process by ensuring that all legal documents are signed properly and without fraud. Their job may seem simple, but it provides a critical layer of protection for both borrowers and lenders.
Understanding the notary’s role can help you feel more confident and prepared when it comes time to close on your loan. With their assistance, you can be sure that your loan transaction is secure, legal, and official.
