Closing may be conducted by a title and escrow company or in a lawyer’s office. Documents may even be signed in front of a notary public at the borrower’s home or workplace. At a closing, the mortgage funds are delivered, usually in the form of a wire transfer, and the escrow officer or attorney allocates it among all participants – for example, a commission to the real estate agent, prepaid taxes to the county, the payoff amount to the seller’s lender and the balance to the seller.
At a closing, the buyer / borrower signs a final version of the loan application, a note (the record of the debt), a mortgage (agreement that the lender can take back the property if the borrower defaults), a Truth-in-Lending disclosure and a settlement statement (HUD-1). There are also state-specific documents transferring ownership of the property. Of all documents, the HUD-1 is the most important because it details the final charges paid and reconciles them to the most recent set of disclosures. There are several lender charges that can’t be increased more than a specific percentage and others that cannot increase at all. The HUD-1 indicates any discrepancies between what charges were disclosed and what was actually charged.