Home Buying: The Closing

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.

Tags: down payment, home, home loan, loan, mortgage, mortgage calculator, mortgage closing, mortgage lender, mortgage loan, mortgage payment, mortgage rate

This entry was posted on Thursday, August 6th, 2009 at 6:35 pm and is filed under Mortgage Basics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.