The home loan closing is the last step in getting your mortgage and actually becoming the owner of your new home. This is time when you will sign a plethora of legal documents. Unfortunately, you’ll have to pay a number of fees and commit to a sizable mortgage loan and mortgage payment as well. These factors can sometimes make your closing confusing and a little overwhelming.
What is the Closing?
The home loan closing or closing is when you finalize all the paperwork for a new home. The closing or settlement is the legal process of transferring ownership of a home from one person to another, and usually involves the purchaser obtaining a mortgage loan to finance the home purchase. At the closing, essentially all of the work you’ve done up to this point is wrapped up. Large stacks of papers will be signed, money will change hands and finally, keys will be exchanged. At the end of the closing process, you will actually own a new home.
Who Attends?
The closing is attended by the main parties involved in the sale and purchase of a home. That means you will be there with your spouse or co-buyer, realtor, and possibly an attorney. It is possible to represent yourself without an attorney or realtor, but be sure you educate yourself completely on the purpose and implications of all the documents you’re signing – this is not a time to misunderstand. It is advisable to have some form of experienced representation.
The seller will attend the closing along with his attorney or realtor. The broker may also be present to help shuffle the paperwork around the table for the appropriate signatures, or it may be handled by the lawyers and realtors.
What Do I Bring?
When you’re ready to close on your new home, you’ve hopefully been working diligently with your realtor and the mortgage lender throughout the entire process. You must bring any documents that have been requested by the broker or seller as well as the mortgage lender. You must also bring proof of homeowners insurance that you have arranged to cover the new home. In addition, you should bring a cashier’s check to cover the difference between the required down payment plus the mortgage closing costs less the escrow money that you have already paid.
As you should always be ready in case of a surprise or emergency, be sure you also bring your regular checkbook, a pen and a current driver’s license or other photo identification. You can look at the Department of Housing and Urban Development settlement sheet to verify you have everything you need with a sample HUD-1 settlement sheet.
What Do I Do?
The closing agent will generally make sure everything is signed and recorded and that the appropriate funds are collected for various fees and expenses and that they are properly disbursed. The agent will explain each document including the transfer of title, the mortgage and mortgage loan and give you and your attorney (if in attendance) the chance to look at them.
If you’ve been working with a realtor or lawyer, they will help walk you through the actual closing as well. You will arrive at the prearranged destination with your check, insurance and any other documents. Your team will meet with the seller’s team. You will sign a great deal of paperwork being careful to read through each page and understand it completely, especially the terms of the home loan and mortgage closing costs.
After all of the paperwork has be completed, you will show your proof of insurance as requested and the seller will be advised to maintain his home owner’s insurance until the sale is recorded at city hall.
Then, once all the paperwork formalities have been completed, the most exciting part of the closing will take place – you will get the keys. Once the keys have been ceremoniously handed over, you will be in possession of the home and can move in right away. The seller will also hand over as much information as he has about the equipment in the home including major appliances, air conditioning, and heating. The entire process will likely be over in less than ninety minutes.
Caution!
There are a few things that can go wrong in a closing, which can draw out the process or stop it completely. Fortunately, these things don’t happen very often, but they do happen. It is possible that the mortgage lender or bank will come back with unacceptable terms at the last minute. This may only stall a closing, but it can also stop it completely. To prevent these types of issues, make sure to be in communication with the mortgage lender a few days prior to the home loan closing to confirm that there are no outstanding conditions that have to be met.
Use the mortgage calculator to confirm the final figures for the monthly mortgage payment, the mortgage rate and the apr so you are prepared for to review the numbers.
There may also be a surprise announcement at closing as to liens, or holds, on the property. It may very well be that there is a hold on the property the seller was trying to outsmart or had honestly not considered important. Preparing beforehand with a knowledgeable attorney or realtor can help prevent or at least soften the blow of situations such as these.
Ultimately, it is your responsibility to understand and agree with everything you are signing, so be sure you are reading and processing all of the information presented at the closing. Then, when the mortgage loan paperwork and title paperwork and other essential documents are done and the keys are exchanged, you can rest assured that your home is truly your own with no complications or string attached – other than your new mortgage and new mortgage payment.
Buyer’s remorse is a common affliction for all manners of purchases, but there is no remorse greater than worrying about the most expensive item in your life – your home.
Buyer’s Remorse
True buyer’s remorse is the worrying and wonder that comes after sealing the deal on a new home and a new home loan. You begin to wonder almost immediately if you got the best price and feel uncertain about your decision. Did you really need this house? Could you have done better? Often buyers question the mortgage rate and mortgage terms. Rather than dwell on your decision and stew over what might have been, try to nip those feelings in the bud so that you can spend time enjoying your new home, not stressing because of it.
Do Your Homework
Before you even begin house hunting, be sure you know your market. Look at many homes in the area and research home values from the recent past. Are values going up? Falling? Staying consistent? A few years ago, it made sense to rush into a home before the value continued to sky rocket. In today’s market, just like researching mortgage rate and terms you have to make time to research, consider and evaluate all of your choices before committing to an offer. Run the purchase price numbers and mortgage loan numbers through the mortgage calculator to get a comfort level on the total home costs. Compare mortgage rates with different lenders and compare different rates and terms in the mortgage payment calculator. Be sure to compare the costs in the mortgage calculators as well.
Preapproval
Eliminate worry by getting preapproval from your mortgage lender. Check the numbers for a new mortgage loan yourself with the help of the mortgage payment calculator and mortgage qualification calculator. Then have a mortgage lender or bank investigate your numbers include your income and credit to issue a preapproval letter. Once you know exactly what the bank will allow you to spend on a new home (and what your own checkbook will allow), you can shop for a new home with confidence. You won’t need to worry about how much payments will be on a particular house or if it would be a stretch. You’ll shop armed with that knowledge so that you can focus on the actual home you’re inspecting not the imaginary inflated mortgage payments that go with it.
Get Another Opinion
If you tend to stall on major decisions, bring along your most trusted advisor. The first advisor is of course, the mortgage payment calculator. For extra help use the mortgage calculators to compare buying and renting and the mortgage terms comparison calculator. For a human advisor, hopefully that person is a decision maker who’s not afraid to tell you exactly what he thinks about a property. If his assessment agrees with your own, you’ll know that you are indeed seeing things correctly. At the very least, feel free to run your decision by your parents or trusted sibling to see if they have any advice or opinions to share before you close.
Make it Yours
Once you’re in a home, distract yourself from wonder by working to make your new space your own. Paint some walls, strip some wall paper, put down some new carpet. Arrange your furniture in each room and buy new decorations to make each room highly personalized. Create your own sanctuary or place of comfort within the home so that your mind isn’t wondering whether you could have bargained for less, it’s spending time in a state of utter peace and relaxation in a place you can call your very own.
Move On
If you find yourself dwelling, force yourself to move on. Research your possible actions. You’ll likely find that the best solution would be to sell your brand new home to try and find one for less. The cost of selling, not to mention the headaches and stress, will remind you that some things just aren’t worth worrying about. You did your research and made an educated decision. You spent time planning your move and didn’t rush into a decision that wasn’t right for you. You compared mortgage rates and costs in the market. You evaluated the monthly mortgage payments and your budget using the mortgage calculators. Now, it’s time to relax and enjoy that decision without worrying about what the neighbors are doing with their home or replaying possible scenarios in your mind. It’s just a waste of energy you should be using to fix up your brand new house.