The closing process is arguably the best part of the home buying experience. You have already been through the loan process, finding your dream home, making an offer, and going under contract. You are now in the home stretch!
But before you call the movers, you need to tie up a few loose ends. That is when the closing process comes into play.
Mortgage closing
During this time, the title to the property is being passed on from the seller to the buyer. The closing agent who officiates this act is typically a title agent or someone from the mortgage company.
The closing agent outlines the settlement information and ensures that all the proper documentation is signed and recorded. The most important task that the closing agent oversees is the disbursement of funds, including closing fees and escrow costs.
Your role at closing time
Essentially what is occurring during this process is that the escrow account you were holding your funds in is now being closed.
The items you will be tasked with include reviewing, authorizing, and dating several legal documents. To make sure you are fully prepared at the time of closing check to see what documentation and forms of payment you will need to gather as soon as you set a closing date.
The documents
Each document signed at closing time holds legal significance. Here is a short breakdown of what some of these forms entail:
- Closing Disclosure: This is required by federal law and is usually the first document you will be presented with. This is the form that outlines all of the costs included with the home purchase.
- Promissory Note: This document is your written promise that you will repay your loan. It states the loan amount, interest rate, payment schedule, term length, and any penalties that may arise if payments are failed to be made.
- Deed of Trust: This is the document that gives the bank the right to foreclose on your home if you fail to make your mortgage payments.
- Certificate of Occupancy: This only applies if you are purchasing a newly constructed home. This form states that your home is in compliance with local building codes and laws.
This stage in home buying process can be a bit daunting since it’s such a certain and finalized step. In fact, it is the last step in a very involved journey.
The earlier you can get an idea of how the transaction will go down, the costs that may add up, and all the documentation you will need to provide, the easier it will be come time to sign on the dotted line.
