You’ve found a home, put in an offer and had it accepted, and gone through inspections. Finally, it’s real estate closing day—the light at the end of the tunnel.
On closing day you can expect to sign two sets of documents:
- the purchase of the real estate
- the mortgage loan you will be taking on to pay for the real estate
At the closing table, there should be an attorney to walk you through each of the following documents, but here is an overview of what you will be expected to read and sign. These are the money documents:
- Truth in lending statement, also known as Regulation Z: Discloses the interest rate, annual percentage rate, amount financed and the total cost of the loan over its life. Make sure that these numbers should match the numbers that you have already received from your loan officer.
- Itemization of amount financed: Summarizes the finance costs, such as points, and is more of an addendum to the document above.
- Monthly payment letter: Breaks down your monthly payment, again make sure that these numbers match the ones that you received previously.
- Mortgage note: This document indicates the amount and terms of the loan and contains your repayment promise.
- Mortgage: Secures the note; if you default on your mortgage the bank will place a lien on your new home as security for the loan.
These documents make the real estate yours:
- HUD Form 1 or Disclosure/Settlement Statement: The actual settlement amount, again watch for errors.
- Warranty deed: Transfers the title of the property from the seller to the buyer.
- Proration agreements: Pro-rates money for the month that you are closing, i.e. home owner’s association dues, etc.
- Tax and utility receipts: Transfers information from the seller to the buyer at the state level.
- Name affidavit: You swear that you are the person you claim to be.
- Acknowledgment of reports: Verifies that the buyer has seen inspection reports, termite reports, etc.
- Search or Abstract of Title: Documentation of the history of the house.
Finely, it’s time to cough up a little cash:
- Closing costs: Time to write that big check that you’ve been dreading.
- Payment for the house: The buyer writes a check for the down payment, minus any deposits, which is then combined with the lender’s check for the remaining portion of the purchase price.
- Escrow Account: The buyer’s annual taxes, insurance and other items are paid through the lender. This account is set up at this time.
That’s it, the house is yours, breathe a sigh of relief, and start packing!
Buying a house? Visit our Mortgage Center.
Josh Anderson is a Realtor with Keller Williams Realty in Nashville TN. If you have any questions about the real estate market, please call (615) 509-7000, email Josh@JoshAndersonRealEstate.com, or visit www.JoshAndersonRealEstate.com.