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  Mortgage Basics   Chapter 6: Closing
Emotions, family and personal reasons all come into play in any home-buying decision.
 
   

Understanding the closing process

 

On closing day, all parties will sign the papers officially sealing the deal and ownership of the property will be transferred to you. It's your opportunity to make any last-minute changes to the transaction.

The day before closing, be sure to gather all the paperwork you have received throughout the home-buying process: good-faith estimate, contract, proof of title search and insurance if necessary, flood certification, proof of homeowners insurance and mortgage insurance, home appraisal and inspection reports. You might need to refer to these documents at closing.

Most home-sale contracts entitle you to a walk-through inspection of the property 24 hours before closing. This is to ensure that the seller has vacated the property and left it in the condition specified in the sales contract.

If there are any major problems, you can ask to delay the closing or request that the seller deposit money into an escrow account to cover the necessary repairs.

At closing, your participation will be twofold:

Present at closing
Closing procedures vary from state to state (and even county to county), but the following parties will generally be present at the closing or settlement meeting:

Present at closing

The closing agent conducts the settlement meeting and makes sure that all documents are signed and recorded and that closing fees and escrow payments are paid and properly distributed.

Closing documents
You will receive the following important documents:

Closing documents
HUD-1 settlement statement: A detailed list of all costs related to the sale of the home. It is similar to the good-faith estimate you got weeks earlier, but the HUD-1 is not an estimate; it is a precise record of the settlement costs. Both you and the seller sign it. Compare the HUD-1 statement against the good-faith estimate to see if the actual closing costs differ significantly. By law, you have the right to review the HUD-1 24 hours before closing. Do so. Clear up any mistakes and resolve problems.
Final TILA statement: You received the first version of this statement after applying for your mortgage. This final version outlines the cost of your loan and APR and takes into account any modifications made to your rate and points between application and closing. Make sure that everything is in order.
Mortgage note: This document states your promise to repay the mortgage. It indicates the amount and terms of the loan, and what the lender can do if you fail to make payments.
Mortgage or deed of trust: This document secures the note and gives your lender a claim against the home if you fail to live up to the terms of the mortgage note.
Certificate of occupancy: If you are buying a newly constructed house, you need this legal document to move in.

Once you've reviewed and signed all closing documents, the house keys are yours and you will have successfully bought your new home!

-- Posted: May 1, 2006
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