Mortgage Closing Process

After you have found a new home, qualified for a loan, and secured financing, the final stage of purchasing property is aptly referred to as “closing.” At the end of the closing process, the buyer will legally own the home and, unless the purchase is a cash transaction, will have opened a new mortgage loan. The mortgage closing is usually scheduled by the lender, who will set a time and date that works for all parties involved. There will be several people present at the closing. Typically, the buyer, the seller, real estate agents involved in the sale of the property, someone from the title company, and the closing agent will all be in attendance. Although the closing process is relatively straightforward, it can be stressful for a new buyer who has not gone through the process before. Your realtor can help explain the closing process and will help you work through the steps to get there.

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Leading Up to the Closing

There are many steps you will need to take before the mortgage closing:

  • Find a property that you want to buy
  • Pre-qualify for a home loan (this step isn’t required, but can help speed up the process)
  • The buyer makes an offer and the seller agrees on a sale price
  • The escrow company requests the title work
  • The home is inspected and appraised
  • The settlement statement is prepared, and the closing costs are finalized

Steps for Closing

The first step is to gather all the documents that will be required at the time of closing. Your lender, realtor, and real estate lawyer will help collect these documents:

  • Proof of title search
  • Money for the down payment
  • The GFE (Good Faith Estimate) document
  • Home appraisal and home inspection reports
  • Proof of home insurance
  • Purchase contract

Once all the necessary paperwork is ready, all parties involved in the sale of the home will meet to sign these documents:

  • Mortgage note (in which the borrower commits to repaying the home loan)
  • Final truth in lending statement (which explains the terms of the loan and outlines the APR)
  • The home deed (this indicates the homebuyer is the new owner of the property)
  • The HUD-1 form (which itemizes all of the costs of purchasing the new home)
  • Real Estate Settlement Act (this confirms that you understand the process of purchasing property)

The sale of the home is complete once the title of the house has been transferred to the buyer, and the seller receives money from the buyer. Unless you have a previous agreement with the seller, you will be able to move into your home after the mortgage closing. After the closing, the hard work of finding a home and securing financing, and finalizing the sale is behind you. Now it’s time to celebrate your new home.

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