You made it through the underwriting process and are heading to the closing – congratulations! While you’ve endured one hurdle, there are a few more you’ll face as you get to the closing table.
In this guide, we help you understand how to best prepare for the mortgage closing.
What is the Mortgage Closing?
The mortgage closing is when you sign all documents and finalize the loan. Up until this point, nothing is ‘concrete.’ You may have a loan approval, but you don’t have a mortgage until you sign on the dotted line. At your mortgage closing, you’ll have your closing agent, mortgage lender, real estate agent, and possibly an attorney. Everyone is there to help you understand the closing process and make sure you know what you are signing.
Once you sign the documents, the money will exchange hands and you will receive the keys to your new home. Unless you live in a ‘dry closing state’ where the funding doesn’t occur until the funding department approves your documents. In this case, the closing may become final in 1 to 4 days.
Getting to the Closing
After you sign a purchase contract, it’s your job to get to the closing table. You’ll work closely with your lender to clear the conditions that keep you from closing. It’s important that you work with your loan officer so that you know what the underwriter needs at all times.
Just because you have a closing date on your purchase contract doesn’t mean that you will close that day. You have to get your financing in line, which includes clearing all personal conditions as well as any conditions pertaining to the property itself.
If you have an inspection contingency on the home, it’s your responsibility to order the inspection and make a decision regarding it before the contingency ends. You’ll also need to make sure the home is worth enough money so that the lender can write the loan.
The Closing Day
Once you get to the closing table, it gets exciting. Before you arrive, you’ll need to arrange how you’ll pay your closing costs and down payment. Make sure you only use the accounts that the lender already approved for these purposes.
You should have received a Closing Disclosure from your lender at least three business days before your closing. On that Disclosure, it states how much money you need for the closing. It’s your responsibility to bring the exact amount in a cashier’s check or wire.
You should also know any conditions that you still have to clear at the closing table. If you are required to bring proof of paid off debts or any other issues, make sure you have what they need. Closing agents can’t close on the loan until you satisfy all pre-funding conditions.
Additionally, you must bring your state ID (driver’s license or passport) and a copy of your paid-in-full homeowner’s insurance. Your paid receipt should be for the first year’s premium.
Once you clear everything, the signing can begin. After you sign all the documents, the closing agent can distribute the funds. He or she will pay the seller and all third parties noted in the Closing Disclosure. Once the funds are distributed, the closing agent transfers the deed from the seller to you and you become a new homeowner.
Getting to the closing table is exciting and important. Make sure you work closely with your lender to ensure that your closing happens on time. If there are delays, your attorney can work with the seller to delay the closing date without penalty or issue. Clearing all conditions as early as possible and following the lender’s guidelines will help make sure things go off without a hitch.