Knowing what to expect when you are closing on that Garland, Rowlett, or Rockwall area home can be a breath of fresh air. If you’ve talked to even a few homeowners about their closings, you may have heard tales of anxiety and more questions than answers regarding their closings.
Our purpose here is to break down the closing process and help you gain the knowledge of what to expect when you buy and close on a new home. This type of knowledge will provide you with peace of mind and confidence in the process. Let’s get started.
The closing is the event where both buyer(s) and seller(s) officially sign the legal documents that transfer ownership of the property. This is usually done at a title company with an escrow officer. In rare cases I’ve seen closings held at an attorney’s office in the presence of an attorney.
Your Participation As The Buyer
At closing, if you are obtaining a loan to purchase the property, you are signing two sets of legal documents. The first set is the agreement between you and the mortgage company lending the money. The second set of documents is the agreement between you and the seller transferring ownership of the property.
This is also where you will pay closing costs and escrow items. A good lender and real estate agent will have prepared you for understanding these fees and escrow items well in advance of the closing. This is a good reason to make sure you are working with a professional real estate agent who is experienced and is confident in guiding you through this process. A professional real estate agent will also happily recommend a quality lender as well. I personally use Jim Catalano. You can visit his website at Mortgage By Jim. I also recommend you subscribe to his newsletter.
Those Present At The Closing
The following parties will generally be present at the closing:
- You (and co-buyer if you have one)
- Your real estate agent
- The closing agent, sometimes referred to as the escrow officer, who likely is employed by the title company or attorney’s office
- Attorney who may be representing you or the lender. Generally, they are not at the closing but they are fully aware of what is happening and they will review the signed documents prior to the loan funding. (Both buyer and seller may have attorneys as well.)
- Seller’s real estate agent
- The lender will have a role but is generally communicating via phone and fax with the title company or attorney.
- The Loan Officer (this is not the rule, but Jim Catalano does attend closings if at all possible)
The closing is conducted by the closing agent (or referred to as escrow officer) who generally meets with the buyers and sellers separately with their real estate agents (and attorneys, on rare occasions), if applicable.
When attending the closing be sure you bring your driver’s license or acceptable form of photo identification. This is a federal requirement.
The role of the closing agent is to ensure that all the documents are signed and recorded and that the closing fees and escrow (interest and insurance) payments are paid and properly distributed to the correct entities outlined in the closing documents.
What To Expect Prior To Closing
Your real estate agent will make arrangements between you and the title company for a time to close. You should receive instructions from the title company as to what you should bring with you to closing. This will include photo identification (driver’s license) and the amount of funds to wire or bring in the form of a cashier’s check to close on your property. The cashier’s check should be made payable to the title company.
What Closing Documents You Will Sign
- A copy of your Good Faith Estimate – The closing agent will provide you with the Good Faith Estimate that was provided you from your lender and obtain from you an original signature, if necessary.
- HUD-1 Settlement Statement – This is an itemized list of the final costs related to the sale of the property. It should be very similar to the figures in the Good Faith Estimate that you received earlier from your lender when obtaining your loan. The difference though, is the HUD-1 is not an estimate. It is the actual settlement costs to the day of your closing. You will want to be sure you understand this document and agree with the fees. By law, you have the right to review the HUD-1 for 24 hours prior to closing. Make sure you review that document before closing. If there are mistakes, get those resolved before closing and make sure you get an updated HUD-1 that reflects any changes, if any.
- Final Truth-In-Lending Act Statement (TILA) – The Truth-In-Lending statement outlines the cost of your loan and the APR. This document is intended to help you be sure you have not been taken advantage of with regards to rate and fees by an unscrupulous lender.
- Certificate of Occupancy – If you are buying a brand new Garland, Rowlett, or Rockwall area property, you need this legal document to move in.
- Mortgage Note – This is usually several pages and legally worded. The closing agent will show you where it states your promise to repay the mortgage, the terms of the mortgage, and what the lender can do if you fail to make your mortgage payments.
- Mortgage or Deed of Trust – This document is also several pages and basically secures the note and gives the lender a claim against the property if you fail to live up to the terms of the Note.
- Lender Disclosure Forms – You will also sign a variety of disclosure forms from the lender, such as, an affidavit that you are who you say you are, explanation of loan terms, the right to receive a copy of the appraisal, how to file a complaint with HUD, a copy of the property survey, and depending on your loan, there may be other forms as well.
What Happens After Signing
Now that both parties have signed, the lender will review the signed documents and provide the closing agent the approval to fund the loan. This is where the house keys become yours and you have successfully closed (purchased) your new home.
A Few Things To Remember
Make sure you receive a complete copy of the closing documents along with a copy of the appraisal, property survey, and any warranties. You should also know when your first mortgage payment is due and know where to make that payment. It is very likely the escrow agent has provided you with a payment letter that has all the details in the event you do not receive correspondence from the lender before the first payment is due.