This is it -- the day you close on your new home!
All parties will sign the papers officially closing the deal and
ownership of the property will be transferred to you.
It's also your opportunity to make any last-minute
changes to the transaction.
The day before closing, be sure to gather all of 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 and private
mortgage insurance, home appraisal and inspection reports. You may
need to refer to these documents at closing.
Most home sales 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.
The closing process
At closing, your participation will be twofold:
- Sign legal documents. These
fall into two categories: the agreement between you and your lender
regarding the terms and conditions of the mortgage, and the agreement
between you and the seller transferring ownership of the property.
Be sure to read all documents carefully before signing them, and
do not sign forms with blank lines or spaces.
- Pay closing costs and escrow items.
Borrowers handle the numerous fees associated
with obtaining a mortgage and transferring property ownership
in one of two ways: they either roll them into the principal balance
of the new loan or agree to pay higher interest rates and have
their lenders foot the bill. Some home buyers may have to pay
these out-of-pocket fees.
Present at closing
Although closing procedures vary from state to state (and even county
to county), the following parties will generally be present at the
closing or settlement meeting:
- Closing agent, who may work for the lender or the
title company.
- Attorney: The closing agent may also be an attorney
representing you or the lender. Both sides may have attorneys.
You may or may not want to have an attorney present, depending
on how comfortable you are with the mortgage provider or lending
process.
- Title company representative to provide written
evidence of the ownership of the property.
- Home seller.
- The seller's real estate agent.
- Mortgagor: the borrower of the mortgage (you).
- Mortgagee: the lender of the mortgage.
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
At this point, you will receive the following
important documents:
-
HUD-1 settlement statement: A
detailed list of all costs related to the sale of the home. Both
you and the seller (who may be paying some of the closing costs)
sign it. Borrowers should compare their HUD-1 statements against
their good faith estimate to see if the actual closing costs differ
significantly from the closing costs estimated by their lenders
earlier. By law, you have the right to review this document 24
hours before closing, and you may want to so you have some additional
time to 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, points, etc., 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 purchased
your new home!
