Closing your home loan is the last step of the mortgage process, and one of the most exciting! You’ve got the right home, received an approval on your new home loan, and are so close to moving in! The closing occurs when you meet with a few key individuals to sign the final paperwork. Typically your loan officer, a title insurance agent, and your realtor are present at the closing, but it can change depending on the transaction or where you live. Your loan officer will let you know where to meet and who will be there.
Signing the Paperwork: There are two types of paperwork that are signed during this stage of the mortgage process. The documentation related to your mortgage and the paperwork that shows transfer of the property from the seller to you. It’s always a good idea to review the documents before signing them. There shouldn’t be any surprises in the final paperwork. If something appears wrong, don’t be afraid to ask for clarification. After signing the final documents, ownership of the home is transferred to you. That means you responsible for repayment of the mortgage from that point forward.
Closing Costs are the fees associated with your mortgage transaction. The most common fees include your home inspection, appraisal, credit report, and pre-paid property taxes (typically called an escrow account). Closing costs will typically be about 2 to 5 percent of the loan amount. A very close estimate of the amount that you owe will be available in your closing disclosure three days prior to closing. It’s possible that amount will slightly change, but your loan officer will inform you of any changes.
There are a few easy things that you can do to lower the amount of cash you’ll need to bring to closing. Wrapping your closing costs into your loan amount can quickly reduce your overall closing costs. Adding the closing costs to your loan amount does increase the amount you have to repay, but it will minimize the amount that you have to pay upfront. Another way to minimize your closing costs is to close your loan at the end of the month. Just like every loan, there is interest attached to your home mortgage. The later in the month you close your loan, the less pre-paid interest you’ll owe for that month.
What’s next? Congratulations! You’ve successfully completed the mortgage process. Watch for your first mortgage payment and follow up with your loan officer if you have any questions. It’s time to move in and enjoy your new home!