The Home Purchase Closing Process When Using a Mortgage Loan

Real estate agent handing keys to young couple home buyers.Congratulations! You have made it to closing on your new home. After your mortgage loan is fully approved, the closing date should be just around the corner. While the finish line may be in sight for you, it’s not yet the end of the home buying process. So be prepared to do a little more waiting and perform a few more tasks.

Here is what you can expect a few days before closing, at the closing table, and after the transaction has been completed.

Just Before the Purchase Closing Date

Shortly before your actual closing appointment, you may be allowed to do a final walk-through of the home to ensure everything is as remembered and no major damage has taken place since you saw it last. This will typically happen 2-3 days prior to closing. If problems are discovered, you can request a delay in closing, have the seller deposit money into escrow to cover necessary repairs, or remedy it in another way.

Parties Typically Involved on Closing Day

At the closing appointment, many parties will be involved. Knowing who they are in advance can be helpful. Here is a list of parties who may be at the purchaser’s and seller’s closing meetings. These meetings are typically done at separate times on the same day, or within a day or two of each other.

1. Closing Agent
This person is responsible for coordinating the activities, individual appointments, and paperwork necessary for the closing of the home purchase.

2. Attorney
Often, the closing agent will be an attorney; however, both sides may have separate attorneys. It can often be useful to have an attorney representing just you, as many of the proceedings and documents will not be easily understood.

3. Title Company
The title company will send documentation to prove the seller’s current ownership of the property being sold and document the new owner.

4. Home Seller
An individual, more than one person, or business selling the home. They will need to sign various forms and prove their identity to release the property. The seller typically won’t have to bring any money to the closing table and can expect to receive whatever funds are due to them within a couple of days.

5. Real Estate Agents
Both the buyer and the seller may have real estate agents present if they choose.

6. Lender
This is the party responsible for providing funding for the home purchase through a mortgage loan and will ensure all of the necessary documentation is available to sign.

7. Home Buyer
Also known as the mortgagor, will need to sign various forms and provide adequate identity information to finalize the purchase. The home buyer may also need to bring a cashier’s check as payment to cover some of the closing costs.

All parties will be notified by the escrow officer of their responsibilities ahead of time.

At the Closing Appointment

At the closing appointment, also referred to as the closing table, borrowers will have the following responsibilities:

1) Sign Legal Documents
The amount of paperwork can be significant at closing; however, the legal documents will fall into two main categories: an agreement between you and the seller, and an agreement between you and the lender. Be sure to read all these documents and hire professional help (attorney) if you don’t feel confident about what you are signing. The closing agent will help with some general questions.

2) Pay Closing Costs and Escrow
Fees associated with obtaining the loan and transferring the property need to be accounted for at closing. This can typically be done by paying them out-of-pocket, or the lender can roll this amount into your mortgage loan. Be sure to check with your lender prior to closing to ensure you know exactly the amount to have available to pay closing costs.

Escrow Accounts

An escrow account holds funds by a third party in the other party’s account. The main escrow account in relation to your new home ensures you pay your property taxes and homeowner’s insurance on time. The lender will require this to protect them against loss if you don’t pay.

Typically, the lender requires you to deposit two months’ worth of property taxes and insurance in this account at the time of closing. Throughout the year, this amount may fluctuate with changes in property taxes or insurance premiums. The amount is most often lumped into the monthly mortgage payment to be of less confusion for the borrower.

After the Closing Documents Have Been Signed

Once both parties sign their individual closing documents, the proper paperwork is sent to the mortgage lender so they can release the buyer’s funds to the seller.

After the funds are released, the county receives a notification and records the deed with the new homeowner’s name and information. Once this is completed, they will receive recording numbers and notify the escrow company so they can pass them along to the buyer’s real estate agent.

Now the deal has officially closed, and the property belongs to the buyer. Only at this time are the keys allowed to be given to the buyer, unless the buyer and seller have reached another agreement – which is not very common.

Which Paperwork Should You Keep?

Throughout this process, there will be several forms and documents which can get confusing. Ask your real estate agent for a hard copy of your final purchase & sale agreement, along with all supporting documentation. Then you can discard any previous copies you may have lying around.

Also, at closing, you should receive a packet full of documentation and paperwork you filled out. You should hang on to all of these documents for your personal records as well. Double-check with your real estate agent to get their recommendations about what to keep and find out if there is any more documentation you need.

Congratulations, you’ve bought a home!

Next Up, Making Your Monthly Mortgage Payments

Be sure to read our next article that covers who to make your mortgage payment to, and why the company you make your monthly payment to (mortgage servicer), and the amount you pay, could change over the life of the loan.

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Posted on February 5, 2021 by in Mortgage Lending

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