What to Expect During the Closing Process of Your Home Mortgage

It is closing day, and completing this process will bring you a greater peace of mind by knowing what to expect. This is the day when all parties will make the purchase official and legal, sealing the deal and transferring the property to the buyer. Here is your final opportunity to make any changes to the existing terms of the agreement.

Prior to closing day, you will gather and organize all of the paperwork accumulated throughout the search and buy process, including:

• The good faith estimate
• Contract
• Proof of title search
• Homeowners insurance
• Flood insurance
• Proof of mortgage insurance
• Home appraisal
• Inspection report

Another item to attend to the day before closing is a walk-through inspection of the home to ensure it is vacated and the property is in the same condition as stated in the various documents. This is a provision built-in to most home-sale contracts. Should there be a discrepancy between what has been agreed to and what the walk-through reveals, the closing can be delayed. An alternative is for the seller to deposit money into the escrow account to cover the cost of any repairs.

At the closing, the buyer’s participation will include two functions. The first is to sign the legal documents. There are two types of documents you will have to sign. The first of these is the agreement between the buyer and the lender specifying the terms and conditions of the mortgage. The second type of document is the agreement between the buyer and seller, finalizing the transfer of the ownership of the property.

Each document should be carefully read and understood, and any errors or omissions brought forth. Do not sign any agreement that contains blank lines or spaces.

The second is to pay the closing costs and escrow items. There are two ways that the lender handles the many fees that are included with both obtaining a mortgage and transferring the property. The first is to combine the fees with the principal balance of the loan. The second is to have the lenders pay the fees but the buyer agrees to a higher interest rate on the loan. There is always the possibility that the buyer will have to incur a direct, out-of-pocket expense for these fees.

While legal requirements vary from state to state, and in many cases county to county, in addition to yourself (the mortgagor), generally the following people will be present at the closing:

• Closing agent – who may be a representative of the lender or title company
• Attorney – Regardless of whether the lender has an attorney present, you should always hire a private attorney to represent your interests.
• Title company representative – to provide written evidence of property ownership
• Seller
• Seller’s real estate agent
• The lender – also known as the mortgagee

During the process, the purpose of the closing agent is to ensure the settlement meeting is conducted properly and that all closing documents are properly endorsed and recorded. Also, the closing agent is to ensure the proper distribution of escrow payments and closing fees.

At the conclusion of the process, you will receive the following documents:

HUD-1 Settlement Statement

This is a list of all the detailed costs related to the sale of the house and goes beyond the good-faith estimate in that it is a precise and exact record of the settlement costs. It will be signed by both you and the seller. The HUD-1 document should be compared to the good-faith estimate to see if there is a significant difference of the actual closing costs. This is another document that can and should be reviewed 24 hours prior to the closing meeting. Any discrepancies or questions should be addressed prior to the meeting.

Final TILA Statement

The initial version of this statement was provided after initially applying for your mortgage. In this final version, the cost of the loan and APR. Also, the document takes into account all modifications made to your rate and points between the initial TILA statement and this final version. Be sure to check this document thoroughly.

Mortgage Note

This includes the terms and conditions of repayment of the loan, including the amount, and what the lender’s recourse is in the event you fail to make the agreed to payments on the loan.

Mortgage/Deed of Trust

This document gives the lender the ability to make a claim against the property in the event you fail to adhere to the terms in the mortgage note. It also secures the mortgage note.

Certificate of Occupancy

This applies if you are buying a new home and is required before you can move into the new property.

Once all the documents are reviewed and properly signed, the keys to the home are given to you and you can now enjoy the success of buying your own home.

For More Information About Home Mortgages Visit: www.loancityhomeloans.com