In Part 1 of the post, “Mortgage Anatomy 101″ … the Current Mortgage Process“ … I detailed much of what happens in the initial portion of your mortgage process. In Part 2, I dug a little deeper into the mortgage process and touched upon your mortgage file’s submission into Underwriting, the Underwriting itself, and then Loan Approval.
In this Part 3, the last article in the series, I will talk about the Closing of your home’s financing. YourMortgage Closing is the culmination of all your hard work and effort over the last weeks. It represents the successful completion of your Mortgage Process. It represents the fulfillment of your dream.
Once your Mortgage Lender has received the Underwriter’s blessing to Close, your Loan Processor “directs” your mortgage file to your Lender’s Closing Department. All information contained within your file is re-confirmed …. the Loan Amount, Loan Payment, Loan Terms, as well as those that will be participating in the Loan Closing. Those are: The Title Company, Attorneys, you the Borrowers, your Mortgage Lender, Agents, and possibly more.
Next, the Mortgage Lender’s “Closer” prepares the Mortgage Documents and sends the final monetary figures for your financing to the Title Company. The Closer then arranges for the Mortgage Lender’s funds (typically via wire) to be provided for the day of your Closing. Note: Until the Title Company Closer has all the figures from ALL parties, including the Seller’s Attorney, the Final Numbers regarding your Closing are not compiled or known.
It’s the Title Company’s Closer that prepares the Final Closing Statement, known as the “HUD 1“, or the “HUD”. Upon that being completed, I can inform you (the Borrower) of the Total Amount of Funds you need to bring to your Closing (if applicable). In Illinois: That amount MUST be wired to the Title Company’s Bank (if over $50,000) or be presented in the form of a Cashier’s Check (if less than $50,000).
Note: I will add … that it IS possible to Close elsewhere other than a Title Company office, in some instances. Ask me … (your Mortgage Lender) … if this is an option that can be exercised and accommodated within your financing scenario. Purchase transactions can also close at the offices of the attorneys involved, and is typically the decision of the seller’s attorney and the title company.
Your big day has arrived! The main focus of your Closing, is to sign the paperwork that will transfer ownership from the seller of the home to you (the new property owner and Borrower) … and to finalize your mortgage financing. * Please remember to bring your Driver’s License (or other Identification) along with you to your Closing.
The primary documents that you will be asked to sign are:
* The HUD-1 Settlement Statement: Discussed above … but this is an itemized listing of the charges and credits involved in the transaction, for both you, the Buyer, and the Seller. They reflect the terms agreed upon in your Sales Contract and with the lender as per the Good Faith Estimate.
* The Promissory Note: As the name suggests, the Promissory Note is your signed promise/document to re-pay a specific amount of money lent to you by your Mortgage Lender upon the Subject Property, with specific re-payment terms.
* Mortgage: This legal document is recorded and protects the Lender by staking the First Claim to the Property in case of Default. Upon full re-payment of the Mortgage Loan, the Lender “releases” its claim as the first Lien-Holder.
* Deed: The Seller of the property will sign-over their ownership to you, the Borrower, at the time of Closing. The title is held for you until the time of total re-payment. As the new Homeowner you should always retain a copy of the deed, as someday you will become the Seller.
* Statements & Declarations: These documents verify that all information you say and represent is factual and true. (That typically means you are attesting to the fact that this residence will be your primary residence.)
I … (your Mortgage Lender) will provide you a packet with the necessary information needed to make your first and subsequent monthly mortgage payments. Keep this valuable information handy, along with your other important documents, and in a safe place for future reference. This will be helpful come tax time.
The Title Company or attorneys will record the newly-signed Deed and Mortgage immediately after Closing. The local taxing bodies will also informed of the exchange of property ownership at this time.
After signing all the required documents is completed, the property keys, garage openers, etc. will be provided to you. It’s now official! Congratulations! You are new Home Owners! Go out and celebrate a job well done. You’ve earned it …
* I hope that my breakdown of the anatomy of the current Mortgage Process has helped you better understand the steps needed to become a new Home Owner (or Refinance) today. And that it removedsome of the nervousness you might have felt about entering it.