The Closing Process
A lot of things happen behind the scenes to get ready for closing day, when the home you choose becomes yours. The mortgage company is compiling information that they need to get your mortgage ready, and the title agency or closing company is confirming that the title is clear, coordinating all parties involved to make sure that everything gets done to secure a smooth closing.
When you apply for a mortgage, the lender will provide you with an estimate of your closing cost based on your purchase price. At closing, you will be signing the finalized Settlement Statement sometimes referred to as a HUD Statement. The HUD Statement will include a breakdown of all of your cost which generally include:
- Down payment
- Loan origination fees, if any
- Points (or loan discount fees) you pay to receive a lower interest rate
- Appraisal fee
- Credit report
- Private mortgage insurance premium
- Escrow for homeowner’s insurance (if paid by mortgage company)
- Escrow for property taxes (if paid by mortgage company)
- Deed recording fees
- Survey
- Inspections
- Prorations for taxes
There are also some items that you will need to bring with you to closing. Your homeowner’s insurance will need to be in place to commence the day of closing. More than likely, the insurance company will have already gotten this information to the closing company, but if not, you will need to bring the declaration page from your homeowners insurance company as proof that you have insurance on the property. There will also be several documents that will need to be notarized, so you will need to bring your driver’s license to prove who you are. Everyone that is signing any papers should have their driver’s license with them. You will also need to bring certified funds with you for the balance needed to close. The majority of the time this number is not available until the day before, and in some instances the day of closing. The closing company is not able to give the buyer an exact figure until they have final approval from the mortgage company. If it gets too close to the wire, you may be given an estimated amount, which may be a little more than you actually need, but the difference will be refunded to you at closing.
If you are signing on behalf of someone using a Power of Attorney, you will need to have a certified copy of that document, which will be recorded. There may also, in some instances be documents that you lender may ask for at the last minute. Usually all of that is taken care of ahead of time, but if they miss something, the closing agent will be required to have whatever it is the mortgage company is asking for before they can proceed with the closing.
Once all the documents are signed the closing agent will provide you with a copy of all of the documents that pertained to your closing either in a hard copy format or on a diskette. You should keep all of these documents in a safe place. If you itemize your taxes you can included some of your cost associated with your closing. That information can be found on your Settlement Statement (HUD). Ask your tax advisor for additional information on this, and provide him with a copy of that form.
The other document that you will need to do something with after closing is your Deed. You will receive a copy of the Deed, which transfers ownership of the property to you, in with your closing documents. The original will be filed with the Clerk Office. About four to six weeks after closing you will receive a certified copy of the Deed. If the home is your primary residence you are entitle to homestead exemption, which reduces your property taxes. You must have that certified copy of the Deed when filing for homestead exemption.
The balance of the documents that you will be signing include the Truth in Lending Statement which summarizes the terms of your mortgage, the Mortgage and the Note, which spells out the terms of you mortgage obligation and the agreed-upon repayment terms. There will be some Affidavits that will be sign, for instance, the seller is usually asked to sign an Affidavit stating that they have not incurred any liens on the property that are not recorded. If you are buying a condo or a home in a deed restricted community you will have Riders to sign outlining the rules and restrictions. Each lender and closing company requires different forms for their files, these are just some of the standard forms that will be included.
Most closing, when there is a mortgage involved, take anywhere from 45 minutes to an hour, and can take longer if there are a lot of questions. Be prepared to spend at least an hour at the closing table. When you are all finished, you will be the happy homeowner of your new home.
