If this is your fist time buying a home, you may be curious about what the closing entails. You have probably heard horror stories about closings. They are tedious, and you should get a good night’s sleep before the big day. You should also schedule enough time off work that you can take your time going through all of the paperwork. And there are mountains of it!
Part of the closing will entail details about the mortgage, and the other part will entail details on the house purchase itself. You should read all documents carefully and make sure that they are accurate. Any typos can cause big problems now or later.
Before the closing, you should be notified of what the closing costs are. You will have to have a check for this amount. You will also have to have a certified check for the amount of the down payment. The lender will also have a check for the amount of the mortgage. All of this money changes hands at the end of the closing.
The first documents you will sign will have to do with the mortgage. You will have to sign a truth in lending statement, which discloses all the details about the loan. An addendum to this statement will also have to be signed, which details the amount of money being loaned and any finance costs. The monthly payment letter will come next, which details how much your monthly payments will be, how much is principal and how much is interest. You want to check this document carefully for any surprises. Finally, you will sign the note and the mortgage. This is the big step where you promise to repay the money, and agree to put the house as collateral for the loan.
Next you will sign all the documents for the house. The first document will be a Disclosure/Settlement agreement, which gives all the details of amounts and costs. Watch for typos. The Warranty Deed is what actually transfers ownership of the house. You will also have to sign an acknowledgement of reports, which may include home inspection or termite inspection. Finally, you will have to sign a search or abstract of title, which gives you the complete history of the house.
There may be additional documents required depending on the situation and the area you live in. For example, you may have to sign a name affidavit, which basically just states that you are who you say you are. Tax and utility receipts may also have to be signed stating whether the buyer or seller is responsible for utilities or taxes for certain parts of the month or year. There may also be proration agreements. Your real estate agent or attorney can best prepare you as to what documents will need to be signed at closing.