What happens at closing?



Before closing, you, as buyer, should receive a good faith estimate (a statement of the estimated costs of closing the loan) from your lender.  This estimate may not be accurate, but represents the lender’s best effort.  When the final costs have been determined, both you and the seller will receive a final “closing statement” from the closing agent.  If you are paying any closing costs or a down payment, you will need to bring those funds in the form of a cashier’s check to the closing.  The closing may take place at an attorney’s or title company’s office, where final contingencies will be resolved, documents will be signed, and funds will  be exchanged.  At closing, the property’s title is transferred from the seller to the buyer.  At this point, the property becomes legally yours!

The following documents will be involved in the closing:

The deed transfers the property’s title to the buyer. It will contain a description of the property and will be signed at closing. It will be sent to the buyer after the closing agent records it with the local government’s registrar of deeds.

The mortgage creates a lien in favor of your lender against the property you are purchasing.  Your new home will serve as collateral, entitling the lender to foreclose on the property if you default on your payment obligations. The mortgage document states the legal rights and obligations of you and your lender.

The mortgage agreement will be accompanied by a "note” that restates the amount of your indebtedness and the penalties for default.  It must be signed at closing.

HUD-1 Settlement Statement  
The HUD-1 Settlement Statement lists and allocates final closing costs and must be signed at closing.

Truth-in-Lending Statement
The Truth-in-Lending Act requires a statement disclosing the terms of the loan (including the interest rate, loan amount, annual percentage rate (APR), and the total payments required) to be provided at (or before) closing.

Initial Escrow Statement
The initial escrow statement itemizes the estimated taxes and insurance premiums expected to be paid from the escrow account during the first twelve months of the mortgage. Updated statements will be delivered annually.

Mortgage Servicing Disclosure Statement
The mortgage servicing disclosure statement simply informs you of whether your mortgage lender intends to transfer your mortgage to another party.  The terms of your mortgage, of course, will be unaltered.