It's finally here - closing day. This is the day that
the parties will sign the papers that officially transfer
the ownership of the property to you. This is the last chance you
have to make any changes to the transaction.
The day before closing, you should gather all of the
paperwork that you have received throughout the process, including:
the good faith estimate, contract, proof of title search and
insurance, flood certification, proof of homeowners' insurance and
mortgage insurance, home appraisal report and inspection report. You
may need to refer to these documents during the closing.
Most purchase contracts allow you to walk-through the
property within the 24 hours before closing. This lets you see if
the property is vacated and in the condition specified in the
purchase contract.
If you find major problems during the walk-through,
you can ask to delay the closing or have the seller deposit money
into an escrow account to cover any repairs.
At the closing, you will:
1. Sign legal documents.
You will sign the agreements between you and your
lender that lay out the terms and conditions of your mortgage. You
will also sign the agreements between you and the seller that
transfer the ownership of the property. You should read every
document carefully. Do not sign anything you have not read or do not
understand. You should also refrain from signing any document with a
blank line or space.
2. Pay closing costs and escrow items
Borrowers handle the closing costs in two ways. They
either roll them into the principal balance of the new loan or agree
to a higher interest rate in exchange for the lenders paying the
costs. Some buyers simply pay the closing costs out of their own
pockets.
Who is present at the closing?
Each state has different closing procedures, but the
following parties usually attend the closing or settlement
meeting:
" The closing agent, who might be an employ of the
lender or the title company.
" Attorneys. Each side can have an attorney. The
closing agent may also be an attorney. It is always a good idea to
have an attorney who represents you and only you to help you
decipher the paperwork before you sign it.
" The title company representative who provides
written evidence of the ownership of the property.
" The seller.
" The seller's real estate agent.
" You, the buyer and mortgagor.
" The lender, known as the mortgagee.
The closing agent will conduct the meeting and make
sure that all documents are signed and recorded. He or she will
handle the payment of closing fees and escrow payments and their
distribution to the appropriate parties.
The closing documents
You will receive the following documents at the
closing:
" The HUD-1 Settlement Statement. This is a detailed
list of all costs related to the purchase of the home. It is similar
to the good faith estimate, but it isn't an estimate. It is the
precise costs that you will need to pay. Both you and the seller
will sign it. You should compare the HUD-1 statement with the good
faith estimate to see if there are any significant differences in
costs. By law, you have the right to review the HUD-1 within the 24
hours before closing. Take this time to clear up any problems or
mistakes.
" Final TILA Statement. This is the final version of
your Truth in Lending Act Statement. It will disclose the cost of
your mortgage and the APR. It should also take into account any
modifications made in regards to your interest rate and points.
" Mortgage note. This document is basically the
promissory note. It says you promise to repay the mortgage. It will
state the terms and amount of the mortgage, and the consequences of
defaulting on the loan.
" Mortgage or deed of trust. This secures the note
and gives the lender a lien against the home if you default on the
terms of the mortgage note.
" Certificate of occupancy. You will need this legal
document before you can move into a newly constructed home.
Once all the papers are read and
signed, you will receive the keys to your new home.
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