Understanding the Mortgage Closing Process

When shopping for a property, finding the ideal real estate listing is only half the battle. Once you settle on your dream home, you have to successfully navigate all the legal paperwork and financial requirements associated with buying real estate. One of the most frequently misunderstood parts is the mortgage closing process. This part of the transaction is all about finalizing your agreement with the sellers and your mortgage lender. Being able to understand closing will help to make the property buying process simple and stress free.

The Closing Timeline

The countdown to closing starts once the seller accepts your offer and you sign a sales and purchase contract for the property. Once this is over, it takes anywhere between four to eight weeks to sort out all the paperwork and schedule the closing. On the day of the closing, how long you spend closing will depend on whether or not you and the seller are in agreement and fully understand all the documents involved. Some people are done in about an hour while others may need several hours.

Where Is the Closing Location?

Before getting deeper into the details of closing, it is helpful to get an idea of where the closing actually takes place. The actual location will depend on what sort of transaction you are taking part in. If you are one of the lucky few people who can pay the full cost of a house without taking out a loan, you can pick just about anywhere for your closing. Many people in this situation like meeting in the office of their or the seller’s attorney.

In the more common situation where your closing involves finalizing a loan, the most common place for the closing is the office of either the lender or the escrow agent who is helping to guide the transaction. Some people also do their closing at the office of a title agent, at home, or even inside the property, they are purchasing.

How Many People Go to the Closing?

The answer to this question is partially a matter of preference. Either you or the seller may choose to attend and bring family members, friends, or partners along for support and companionship. However, the only people that really need to be there beside you are those sorting out all the complex matters of the closing. This can include attorneys and real estate professionals representing both you and the seller, along with representatives for the seller and any lending agencies involved. You will also have a notary to witness the closing and a closing agent who is often from the title company.

Important Documents You Need to Bring to a Closing

You can expect your agent, attorney, and lender to bring many important documents for you to sign. However, there are also a few things you personally need to bring with you. Be sure you have photo identification with you to confirm your identity. You may also need documents like a proof of homeowners insurance and a cashier’s or certified check. Your agent should tell you what sort of check is preferred and help you fill it out properly. Consider bringing along your final sales and purchase contract to make sure the closing goes according to the initial contract.

The Costs Associated With Closing

At your closing, there are all sorts of fees and payments you should expect to make. You will need to pay your down payment or any other initial payments, and you will typically need to pay closing costs as well. These costs will be given to you in an itemized list by your lender a few days before closing. You can make a wire transfer to pay them, but this has to be done in advance to let it finalize by closing. Another option for payment may be a check.

What You Can Expect During the Closing

During closing, you will sit down with everyone else and review and sign many types of documents. Every closing varies a little, but there are three documents you complete during every first mortgage. You sign a deed of trust that is essentially you agreeing to use the property as the lien for the loan. There will also be a promissory note you sign that is you agreeing to make payments to the lender on an agreed-upon schedule. Finally, you will also review the closing disclosure that discusses all charges associated with the closing.

In addition to signing documents, closing is also about ensuring that you have met all requirements for taking possession of the house. You may need to show the lender that you have homeowners insurance and have passed inspections on the house. You will also need to go ahead and transfer funds to the seller or lender if you have not already done so.

What Happens After the Closing?

After you have finished up all the steps of closing, you are officially the owner of the real estate. Depending on your agreement, you may get the keys and take possession of the property immediately, or you might wait for a little for the seller to vacate. In some cases, you may need to remember to deal with certain post-closing agreements, like reimbursing someone for property tax or getting certain repairs done. You no longer have to worry about the sale falling through because the property is now truly yours, and you can begin your plans for transforming the house into your home.

Interested in learning more about mortgage solutions? Contact The Busch Team for more information.

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