Closing on a Mortgage - The Final step

Posted by  on Apr 16, 2009
You have finally found your home, and months of waiting and paperwork are over. Now, it is time to close the mortgage deal. By this point, you're tired and wince at the thought of signing a document or reading one for that matter. Hang in there, it's almost over. If your application is found acceptable, a firm commitment is issued to the borrower and the lender prepares for the closing of the mortgage. This is the final step before you can call the house your own. In fact, two separate closings occur at this time: the closing of your loan and the closing of the sale.

Before you relax, there are a few more details to complete. First of all, you need to set a closing date. Once your application for a mortgage loan has been approved and you have received a commitment letter from the lender, you should settle with the seller and home loan lender the actual date of closing. Make sure that settlement will take place before your rate lock agreement expires. You will also be required to pay your closing costs and down payment at the settlement. It's important to know before closing date how much money you'll need at closing.

Within three business days of receiving the loan application the Real Estate Settlement Procedures Act requires the lender to give you a Good Faith Estimate of closing costs, which lists the charges the buyer is likely to pay at settlement. This is only an estimate and the actual charges may differ. Go to our page Closing Costs to see a list of the costs and fees you can expect to pay at closing.

Now it's time for the final inspection of the property. If repairs or maintenance on the property are a part of the purchase agreement you should make a final inspection of the property. Depending on local custom, closing could be conducted by an escrow agent, attorney representing you or the lender, real estate agent, or title insurance company's representative.
There are a few final documents that will need your signature at closing. One is the Deed.

The Deed is the document that transfers title to real property from one owner to another. The deed should contain an accurate description of the property being conveyed, should be signed according to the State laws where the property is located. The deed will be sent to you after the closing agent officially records the deed at your local government office.
Another is the Mortgage. It is a lien on the real property that gives the lender the right to take the property by foreclosure if you default on the loan. It states your and lender legal rights and obligations including your responsibility to make your mortgage payments and pay real estate taxes and insurance on time.

Finally a Deed of Trust is used in place of a mortgage in some states. By signing a deed of trust, the borrower transfers the legal title for the property to the trustee until the loan balance is paid. If the borrower defaults in the payment of the debt, the trustee may sell the property without legal proceedings.


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