You’ll know you’re almost officially a homeowner when it’s time to close on the house you’re buying. It’s an exciting time and one of the last steps in the mortgage process.
Closing usually occurs at a title company’s office, but it can also take place at your lender’s office, a real estate attorney’s office or elsewhere. On closing day, you’ll review and sign any remaining paperwork, pay the down payment for your house (if applicable) and pay for closing costs.
Below is a little more on what you can expect when you close.
The specific documents you’ll sign may vary, but some of the most important pieces include the following:
- HUD-1 Settlement Statement: This is an itemized list of the final credits and charges for you and the seller based on the terms of the contract. You should receive a copy of the HUD-1 at least one day prior to the closing for your review.
- Deed of trust or mortgage: The documents in which you agree to a lien on your property as security for repayment of your home loan.
- The promissory note: The mortgage promissory note is a legal “IOU” that represents your promise to pay the lender according to the agreed terms, including the dates on which you must make your mortgage payments and where they must be sent.
Be prepared to sign and initial page after page. As monotonous and redundant as it may seem, it’s important to review and verify that each document is accurate. Take your time, this is a large and important transaction.
The cost of closing is typically about 3 to 6 percent of the mortgage amount. You will receive an official Closing Disclosure form three days before closing that will clearly define the cash you will need to close.
Closing costs may include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement.
Who Attends Closing?
This depends on the laws in the state where your property is located, the type of home, property and more. In addition to yourself, people who attend the closing might include:
- Your attorney, if you have one.
- The seller’s attorney, if they have one.
- The buyer’s and seller’s real estate professionals.
- The builder’s representative, if a brand-new home is involved.
- The closing agent, who could be a title company representative or a real estate attorney.
- A notary public.
- The seller(s), but it’s not very common.
What to Bring
You’ll need a government-issued identification card with a photo. Additionally, you’ll need to bring a cashier’s check made out to the title company to pay for your down payment, closing costs, prepaid interest, taxes and insurance or other costs.
Alternatively, you can prearrange to have the money wired from your bank.
Once that’s all squared away, the title company will send the paperwork to your lender to be reviewed.
After You Close
Once you’ve signed everything and paid the title company, you’re almost home! The title company will send the paperwork with your signature to the lender to be reviewed. This is called the “funding” part of the loan process.
When the lender signs off and wires the money for your loan to the title company, the title company will give you your keys.
Tips to Speed up the Closing Process
If you want to make the closing process as quick as possible, here are some suggestions:
- Coordinate with the seller of the house: You can’t officially close until the seller of the home has signed the documents that you’ll sign at the title company. The seller doesn’t need to sign the documents at the same time that you do, but you can always work with the seller to coordinate a time that is convenient for them to sign. If you’re working with a real estate agent, they may be able to help arrange this.
- Consider the time and date you plan to close: Generally, the earlier in the day and the earlier in the week you plan to close, the better. This has to do with title companies’ and lenders’ hours of business and the fact that most of them aren’t open on weekends. For example, if you go to close with a title company at 3 p.m. on a Friday, your funding probably won’t go through until at least Monday morning.
- Wire money instead of writing a check: Prearranging to have funds for closing costs and your down payment wired from your bank is going to be faster than having to wait for your cashier’s check to be cashed.
At PrimeLending, we make home loans simple from the application all the way through to closing. To learn more, contact a PrimeLending expert near you.