The Closing

The day of closing consists of signing paperwork and paying all expenses owed to close your loan.  If purchasing, several people who are involved in the sale might attend your closing appointment including you, the seller, both real estate agents, and in some cases your loan professional.

Closings can vary according to area and situation, but most follow this basic pattern: 

• the closing agent will review the closing/settlement statement with you
• insurance and inspection documents are presented
• if purchasing, you and the seller sign the requisite closing documents
• a certified or cashier’s check is collected for the closing costs (and down payment in purchase transactions)
• in some cases these costs are withdrawn from an escrow account
• the lender will issue a check for the amount of the home loan to the closing agent
• an impound or new escrow account may be opened to collect property taxes and homeowners insurance premiums if it is necessary to include these costs in your monthly payment or at your request
• for refinance transactions, there is a 3-day right-of-rescission before the loan funds
• for purchase transactions, the loan will close and you will receive the keys to your new house according to the provisions laid out in the purchase contract

You will leave the closing with a few key documents.  The HUD-1 Settlement Statement itemizes the services provided and the charges (to the buyer and seller for purchase transactions).  Reviewing this statement in advance allows you to bring your check made out for the correct amount needed to close.  Because the terms of your loan may change between the time you submit an application and the closing, you should receive a final Truth in Lending Disclosure that outlines the costs of your loan, APR, and other terms including the finance charge, amount financed, payment amount, and total payments required.

The deed of trust or mortgage places a lien on the property as security for the loan.  It gives the lender the right to foreclose and take possession of the property should there be a default.  The promissory note is the legal IOU.  This note states your promise to repay the lender according to the terms agreed upon including the date the payments are due and where the payments are to be sent.