What Happens at Mortgage Closing?

Published by nora | Filed under Buyer / Seller Tips, Miscellaneous, Mortgage / Finance, Real Estate

Closing on your home is the last step you’ll undergo before you finally receive the keys to your new home. If you prepare well, closing day would be among the most exciting days in your life and that of your family, full of gladness and expectation.

At closing, there are at least five things you will do:

1. Review and sign all the loan documents.
2. Show your homeowner’s insurance premium receipt and inspection report.
3. You pay the down payment, closing costs and other fees explained to you before closing day.
4. Your lender’s representative and closing agent will complete the processing of the documents and disbursement of the funds.
5. You receive the keys to your home.

The documents that you will sign or check at closing are the following:

1. Deed of mortgage or trust
This document, which can consist of several pages, expresses in writing your agreement to secure your home loan with the home you’re buying. This will ensure that you’re going to repay your home loan over the term agreed upon and, in case you default, it will give your lender the right to foreclose and repossess your home.

2. Promissory note
This note, also called mortgage note, is a written representation of your promise to pay your home loan according to terms that you agreed with the lender. This note includes the amount of your monthly loan payment, the dates when you must make your monthly payment, and where you must send your payments.

3. HUD-1 Settlement Statement
This statement contains all the details about your home loan, including your home loan, loan type, loan terms and settlement charges.

4. Bank Home Loan Summary
This is the document given to you by the bank when you negotiated for a loan. It’s similar to the HUD-1 statement and it signifies the bank’s commitment to be forthright and reliable in its dealings. Some banks call this summary as Truth in Lending Disclosure.

Typically, the people expected at closing are:

1. You, the home buyer
2. The seller or sellers
3. Representative of your lender
4. Closing agent, who is usually a representative of the title company
5. Your real estate agent and lawyer, if you have
6. The sellers’ lawyer or real estate agent, if they have

A mortgage closing can be completed in one hour, if there are only a few questions, and more if there are still things to be resolved between the parties. The closing can be done at the office of the title company, the lender or the real estate lawyer.

On the whole, to make your closing day a smooth and pleasant experience, do your homework. Ask help from your real estate professional or your mortgage officer and be clear about all steps of the homebuying process.