Step : Getting Ready to Close a Home Loan Closing Your Home Loan

Closing

This is it. You’re buying a house! This is a huge accomplishment! You should be very proud. Now, let’s talk about what happens to ensure that the house legally becomes yours. During the closing?, you’ll have to sign several settlement documents and provide funds for the home purchase. Your lender? should wire funds for the loan to the closing agent to disperse. You may also need to bring along a cashier’s check for an out-of-pocket down payment? or any costs the loan doesn’t cover. Your lender and closing agent will explain where all the money goes, so don’t be afraid to ask. The seller will transfer ownership to you, and you’ll officially become a homeowner. Here’s what you can expect during the closing:

Consider an eMortgage if available

Although the electronic closings (eClosing) segment is relatively new and small in the mortgage? industry, it is growing. If your lender offers eClosings, you may avoid physically meeting in person to close your loan, and instead close electronically via an audiovisual connection (e.g., Zoom, Skype, or FaceTime). So, when you sign documents for your loan, you’re signing electronic documents, such as a PDF, instead of paper documents. In addition to reducing paper, an eClosing? makes it easier to review your documents prior to closing, which allows you to ask questions, resolve errors, and avoid delays. Completing either some or all closing documents electronically can save you time.


Sign & notarize paperwork

Expect a considerable number of documents to sign during closing. While you may be tempted to sign them without reading them thoroughly, it’s extremely important to understand what the documents imply and to know that each is legally binding. It’s also imperative to check for accuracy. For example, look for the spelling of your name, loan terms (e.g., rate, term, payment), and closing costs?.

Some of the documents you’ll sign will include:

  • Closing disclosure

    You will have received a copy of this before closing and another copy at closing. The disclosure covers all the details of your loan.

  • Loan application

    The loan application contains key details about your finances and should be reviewed again for accuracy.

  • Mortgage note (or promissory note)

    The note represents your commitment to pay the money back.

  • Deed of trust

    The deed provides security for the loan. It uses the house you’re buying as collateral, which means if you default on mortgage payments, the lender can foreclose on the house.

  • Title

    The title records your right to the home—technically, you don’t have full ownership until you pay 100% of the loan back.

  • Deed

    A public document that shows the transfer of property ownership from the seller to you.

  • Affidavits

    Affidavits are legally binding documents that you sign to indicate that all the information you’re providing is accurate.

  • Initial escrow disclosure

    A document required by federal law (if you are creating an escrow account) that accounts for financial obligations that extend beyond the loan itself.

  • Transfer tax declaration (if applicable)

    A form that applies to property transfer taxes that may be required in some cities, counties, and states.

  • Certificate of occupancy (if newly constructed home)

    The certification indicates that the house is in compliance with building codes, and it is suitable for occupancy.


Homeownership transfers to buyer

Closing day is when the official transfer of homeownership from the home seller to you, the homebuyer, begins. If you’re closing in person, you can expect a representative from the closing agent to guide you as you sign your paperwork. Depending on the state you live in, a real estate attorney and/or notary may be present. Before you arrive, make sure you bring items that are necessary for the closing, such as your photo ID, a cashier’s check, and whatever else your lender or closing agent suggests.


Moving to-dos

Here we are! The moment you’ve worked toward. It’s time to celebrate as you prepare to move into your new home. Moving can be just as overwhelming as the homebuying process.

Consider the following activities prior to closing day:

  • If you’re renting, give your rental management company notice as soon as possible.

    Landlords and rental management companies typically require at least a 30-day notice to vacate depending on your lease. Usually, if the notice is less than that, you could lose your security deposit and face other penalties, depending on the terms of your lease.

  • If needed, schedule a moving company or truck.

    Your real estate agent may know reputable moving companies, or you could ask around. It’s important to talk to a few companies and get different estimates. If you don’t think you have enough things to move to require professional movers, you might still need a moving truck. Regardless, shop around to find the most cost-effective option.

  • Turn on the utilities.

    You may need to immediately transfer utilities like gas, electric, water, and sewage to your name. Other utilities, such as garbage collection, cable, and internet, can wait until your official move, but make sure to schedule start dates for these items ahead of time.