In Closing

Posted by  on Apr 16, 2009
If you are closing in on a mortgage there are some things to know about the closing procedures, closing costs, and mortgage terms. To start, understand that you will be required to pay your closing costs and down payment at the settlement. It is important to know before closing date how much money you will need at closing. If the application is acceptable, the firm commitment is issued to the borrower and the lender prepares for the closing of the mortgage, 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.

Within three business days of receiving the loan application RESPA 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 the closing costs to see a list of the costs and fees you can expect to pay at closing. The HUD-1 Settlement Statement is a standard form that shows you the actual amount of money you will need to bring to closing.

It is also a good idea to let the lender know that you will want to see the HUD-1 Settlement Statement before closing and question any amount that you do not understand. It is also advisable to review all the documents you will need to sign prior to the 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 lender the actual date of closing. Make sure that settlement will take place before your rate lock agreement expires. The Initial Escrow Statement itemizes the estimated taxes, insurance premiums and other charges anticipated to be paid from the escrow account during the first twelve months of the loan. It lists the escrow payment amount and any required cushion. An Annual Escrow Statement must be also delivered to borrower once a year. The Mortgage Servicing Disclosure Statement discloses to the borrower whether the lender intends to service the loan or transfer it to another lender.

In addition, you should make sure you know exactly when and where you should send your first and subsequent payments and what the penalties are for being late. If repairs or maintenance on the property are a part of the purchase agreement you should make a final inspection of the property. Keep in mind that closing should 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 things to remember in these situations. To start, know that the mortgage is really just 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.

There is also a deed of trust that 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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