Closing is an exciting part of the process. Ownership of the home
transfers from the seller to you the buyer. Before this last stage,
you would make a final home inspection to verify that any repairs or
changes have been made.
Click the tab below to view the roles and steps in the closing process.
Review Your Closing Documents
Like the processing stage, closing requires careful attention to
details in documents. If errors appear, such as misspelled names,
title to the home may be recorded incorrectly. These documents not
only transfer the title to the home, but also inform you about the
details of the transaction.
The list below includes various documents you will review and sign
at the closing. Ask to review the settlement statement document
before the closing meeting. There usually is not time at the closing
meeting to read each document. You and your attorney will examine
them for important language and accuracy.
Click the links to see examples of some of these.
List of Documents
Promissory Note — A written
promise to pay a specific amount at a specific time.
You are agreeing to repay your loan. Sample
Deed of Trust — A security
instrument in which the borrower conveys title to
the property to a third party who holds it in trust
as security for the lender. This is similar to a mortgage,
but uses a third party to hold the deed. Sample
or
Mortgage — A pledge of property
as security for a debt. If you fail to pay the loan,
you are agreeing that your lender can take the property. Sample
Uniform settlement statement (HUD-1)
— A settlement summary form required by RESPA
to be used by closing agents. This form shows all
your closing costs. Sample
Truth-in-lending disclosure —
A statement required by the TILA Act to include the
annual percentage rate (APR) as well as other facets
of the mortgage. This tells you how much you will
pay for your loan over the period of your mortgage,
usually 30 years. Sample
Title insurance policy —
Insurance that protects the buyer, lender or others
against any loss caused by a defect of title to the
real estate. This protects you and your lender's investment
in case someone else claims prior ownership of your
home.
Hazard insurance policy Insurance
coverage that pays the insured in case of property
loss or damage. This policy protects you and your
lender's investment in case of weather related damage
or other covered losses.
Right of Recision Disclosure—
A statement of the buyer's right to nullify the transaction
within 3 days after closing. This right applies to
refinances only not first purchase of a home.
Depending on the loan type and program, there might be additional
documents required in the closing package such as those listed below:
Homeowners association agreement for condominiums
Riders for adjustable-rate mortgage loans
Real estate sales contracts
In the next section, you will review what you learned about closing
costs and learn more about each person's responsibilities at the
closing meeting.
