The mortgage closing process can seem a little overwhelming and mysterious to first-time buyers. The good news is, once you understand what happens, you will see that there is not much to it. Your loan will close when it has been approved by the lender and all conditions of the purchase agreement and the mortgage are met and approved.
Before a mortgage closes, many people are at work ensuring all conditions of the purchase agreement are met. After the buyer and seller sign the contract, the loan application and approval process takes place. Conditions of the agreement must be met, including any contingencies, home inspections, pest reports, insurance requirements, title checks and more. The seller will need to prepare and sign disclosures, be available to answer questions, fix any problems that may come up with the title, and make the home available for inspections. The buyer will need to deliver any requested documents to the lender. The closing date will also be scheduled.
The following steps are completed during escrow:
To prepare yourself for closing, you must get together all loan and property documents you have received. This includes proof of homeowners insurance and flood insurance, the purchase agreement, the home appraisal, the home inspection report, proof of title search, and the Loan Estimate (LE) from the lender.
At closing, you will need to sign several documents including the Closing Disclosure (CD) Settlement Statement, Final Truth in Lending Act statement, deed of trust securing the note, and the mortgage note that says you promise to repay your loan. You will also need to pay closing costs at this point. Depending on the loan program you have chosen, you may have decided to roll the closing costs into the loan, or your lender may have agreed to pay the costs.
Your real estate agent or title company will hold the closing meeting and ensure the documents have been signed and recorded. The actual closing may be held at the office of the escrow or settlement agent, the lender's office, or the title company depending on customs in your area.
After all documents have been signed, you will receive the keys to your house.