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Mortgage Closing Process: When Does It Close & When Do I Get a Key?

February 9th, 2018 7:08 AM by Jackie A. Graves, President

What is the Mortgage Closing Process?

A mortgage closing is the last step in buying a home: At the end of the closing, the buyer becomes the legal owner of the home. This article will walk you through the details of a mortgage closing so you’ll know exactly what to expect.

What Happens at a Mortgage Closing?

At a mortgage closing, all legal documents — both those related to the mortgage loan and those related to the transfer of the property from the seller to the buyer — are signed. These documents may include your mortgage note, in which you promise to repay your lender; the home deed, which grants you ownership of the home; the Real Estate Settlement Procedures Act paperwork, which states that you understand the closing process and financial obligations related to your mortgage; the Truth in Lending Disclosure Statement, which lays out the terms of the loan including the annual percentage rate and information on points; and the HUD-1 Form, which itemizes all the costs related to the sale of the home.

It’s not just document signing. Money may also transfer hands: The buyer and sometimes the seller may pay costs related to escrow or closing to the lender, and the lender gives the closing agent money to cover the mortgage amount. Other things that may occur: The buyer shows proof of homeowners insurance so that the lender will fund the mortgage loan, and the closing agent sets up an escrow account for the buyer, which will help the buyer pay taxes and insurance on the property. Finally, the buyer will receive the title to the property; the seller or a representative of the seller will give the buyer the keys to the new place; and the closing company, attorney or title company officially records certain documents such as the warranty deed.

Who Will Attend the Mortgage Closing?

Who attends a mortgage closing will vary depending on where you live, but in general, these parties are likely to attend a closing: The buyer; the seller; the escrow/closing agent; attorneys for both the buyer and the seller (the attorney may be the closing agent); someone from the title company; the mortgage lender; and real estate agents.

When Will My Mortgage Close?

The mortgage closing is the final step in the home-buying process before you officially own the home. So before the closing, you’ll first need to find a home you like, make an offer, get approved for the mortgage loan and have the seller accept your offer. Once all that is finished, you will close on the home. The closing is completed once all the documents are signed and the required monies have changed hands (see above).

How Does a Mortgage Closing Differ for a Purchase Loan vs. a Refinance Loan?

For one, the parties present at a closing for a refinancing are different (and there are fewer of them) than those at a purchase closing: There is no seller (it’s a refinance of your existing loan) or real estate agent present, and sometimes it’s just the owner of the home and a representative for the lender.

Furthermore, at a closing for a refinance loan, you’ll get something called a rescission period. This is a three-day window during which you can walk away from the refinance loan without penalty. The lender must then refund the fees you paid and give up its rights in your property. If you do not decide to rescind, your lender will fund your new loan, and the closing agent will use the funds to pay off your previous mortgage loan.

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Posted by Jackie A. Graves, President on February 9th, 2018 7:08 AM

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