Closing on your mortgage is the last step in buying your home. Once you’ve completed the closing process, you become the legal owner of your home. Obviously, this is one of the most important and critical steps, because without closing, you don’t actually own your home. We’re going to take you through all the details of the mortgage closing process, so you know what to expect.
If you’re purchasing property, your closing is likely to be a little more involved. You’ll:
If you’re refinancing, you might have to:
Of course, you’ll be signing a lot of paperwork. Before doing so, however, you must absolutely understand what you’re committing to when you sign those final documents. Read more to achieve that understanding.
1-3 days prior to closing, you’ll want to prepare. Gather all the paperwork you’ve acquired since you submitted your first offer on the house through your real estate agent. This may include:
Signed contract from your real estate agent
Good-faith estimate (GFE) from your lender
Home appraisal and inspection reports – these may be provided by your lender, or the individual you contracted with to provide the appraisal and home inspection
Proof of title and title insurance from your title agent
Homeowner’s insurance and mortgage insurance from your insurance company
Some of these documents may not be needed, as your real estate agent and lender have copies of all of them. However, you should familiarize yourself with the details of the deal so far, so you’re ready when you sit down to sign papers at the closing
The closing process will be different depending on where you live. You may expect your real estate agent and lender representative to be present when you sign. If you have an attorney, he or she should be present too. In some cases, you may sign at the same time, or separately, from the seller. Either way, expect the sellers real estate agent and attorney to be present, along with a title company representative, who will provide evidence that the seller owns the property.
Here’s a list of the various agents who could be present at your closing
It’s important that you understand closing costs before you close on your mortgage. Closing costs are divided into three categories: some can’t vary from disclosures at all, some can vary within predetermined ranges and others can change without limit.
Charges that cannot increase at settlement:
Charges that cannot increase in the aggregate by more than ten percent at settlement:
This means the total of all these charges can’t increase by more than ten percent over the total disclosed in the GFE.
Charges that cannot increase in the aggregate by more than ten percent at settlement:
One reason that the Good Faith Estimate (GFE) is so powerful is that a lender must disclose its charges accurately. Fees are not subject to the tolerances listed above should a material change occur that directly impacts the fee, and a revised GFE is provided within three business days after the change occurs.
There will be many closing documents to review and sign. These may include:
These sample closing documents are on external sites, and will open in another tab or browser for you.
In addition to the Settlement Statement, you’ll also sign a final mortgage application. Look it over and make sure it’s accurate — that your income, debts, employment and assets are accurately represented. Even though your lender will have filled it out, you are responsible for its content. You’ll also get your final Truth-in-Lending (TIL) disclosure. It discloses the financing costs: the loan’s APR, how much you’ll pay over the life of the loan and what your mortgage payment will be. If you’re refinancing your primary residence, you’ll also get a notice of your right to rescind or cancel the transaction within three business days.
Closing a mortgage should come with no surprises, but be prepared to put the brakes on if there are. Your loan officer should either be at the signing with you or available by telephone during your appointment to answer any questions or take care of issues that arise. Don’t sign anything you don’t 100 percent understand or agree with, and you’ll be fine.