The long anticipated, final step of the homeownership journey – closing day! Despite how exhilarating this day is, there are a few things to navigate first. A PrimeLending loan officer is here to guide you through the basics and answer any questions that may arise on this memorable day.
Total closing costs, the fees charged by the lender and third parties for their involvement, vary by lender but typically range from two to six percent of the home’s purchase price. Closing costs are based on the home itself, it’s location and the type of loan you receive. The buyer is almost always responsible for closing costs. You will receive a detailed accounting of closing costs you will be expected to pay in the Closing Disclosure provided to you at least three business days before your closing.
Typical Closing Costs
Because no two homes, or loans, are the same, it’s almost impossible to provide a complete, accurate list of what to expect in your closing costs. The most common costs for a buyer include:
- Home inspection
- Attorney fee (if required)
- Title search
- Recording the property deed
- Tax services
- Credit report
What are Discount Points?
Paying discount points is like pre-paying interest on your loan to get a lower interest rate. It’s a way to reduce how much interest you’ll pay on each monthly payment. One discount point typically costs one percent of the total loan amount and lowers the rate by 1/8 to 1/4 percent.
For example, on a $200,000 loan, each point would cost $2,000. Assuming the interest rate on the mortgage is five percent and each point lowers the interest rate by 0.25 percent. Buying two points will cost $4,000 and will result in an interest rate of 4.50 percent.*
Paying for discount points is the smart move if you intend to stay in your home well after you earn back the initial costs – a PrimeLending Home Loan Expert will guide you and confirm if this is the best route for you.
Who attends closing?
Depending on the laws of the state where your property is located and the type of property being purchased, you might invite the following people to join you during closing:
- 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 being purchased.
- 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.
Our eClose process makes your closing experience easier, quicker and more convenient than before. That’s because you can handle most of the closing process online with PrimeLending.
- Closing Documents: Days before closing, your loan officer will send you all your final documents to review online. This way, you’ll have plenty of time to read over each document and ask any questions before closing on your loan.
- Signing: Or should we say, esigning. Throughout your mortgage process, you will sign many documents digitally. Now, that process has expanded to eClose. On the morning of closing day, you’ll receive the closing documents you can esign online. There will be a few documents that still need your hand-signature or before a notary, but those can be handled at the closing table in minutes.
Steps in the Closing Process
For the few remaining documents needing your signature, your closing might be held at the title company’s office, your lender’s office, a real estate attorney’s office or other location depending on the situation.
Here’s what you can expect to happen:
- You’ll review and sign your final loan documents. It’s important to take your time and ensure you fully understand each document and the terms you’re agreeing to. If something is different than what you expected or agreed to, don’t sign until the issue is resolved to your satisfaction.
- Your lender will distribute (wire) the funds covering your home loan amount to the closing agent.
- Depending on your loan terms, you may be required to set up a new escrow account with your lender. This escrow account will be used to pay property taxes and homeowners insurance as part of your monthly mortgage payment.
What to Bring to Closing
Preparation is key on this landmark day – arrive at closing prepared to provide your government-issued photo identification and a certified check made out to the title company. This certified, or cashier’s check, covers your down payment (if applicable), closing costs, prepaid interest, taxes, insurance and other miscellaneous fees.
As overwhelming as the closing day checklist might be, your PrimeLending Home Loan Expert will ensure you know exactly what to bring – contact us online and we’ll guide you every step of the way.