Closing Your Loan

The closing (or settlement) is the actual transfer of ownership from the seller to the buyer. At the closing, you will sign the paperwork, pay the final closing costs and finally take ownership of your new home. Your IFC-group loan advisor will work with you and your realtor to schedule a closing date, which is indicated on your purchase agreement. Although the closing process varies by state, many activities are standard. For the closing costs, you'll need to obtain a certified or cashier's check, as the title or escrow company does not usually accept personal checks.

What Happens at Closing

Closing costs and practices vary depending where you live, the type of property you're buying (house, condo or co-op) and individual circumstances. In some states, a neutral third party, usually an escrow company that is mutually chosen by the buyer and seller, transacts the entire closing process. In others, title companies customarily oversee the process. In the remainder, attorneys are engaged. Your IFC-group loan advisor can tell you what to expect.

The closing, typically held at a title and trust company, is the final hurdle to calling the house your home. In many cases, all parties involved will attend, including you, the seller, the real estate agents, the lawyers, the lender and any other interested parties. In some cases where the buyer is unable to attend, the process still takes place but with the buyer having previously signed the required documents and sent in by mail.

The steps below explain what usually happens during and after closing:

1.        The closing agent reviews the settlement sheet with you. Both you and the seller sign the settlement sheet.

2.        Signatures are collected for loan documents, such as the mortgage or deed, note and Truth-in-Lending statement. Evidence of the required insurance and inspections is presented.

3.        If everyone agrees that the papers are in order, you submit a certified or cashier's check to cover your down payment and closing costs. (Or, in some proceedings, it is drawn from an escrow account established for your home purchase.)

4.        The lender provides check funds covering the home loan amount to the closing agent.

5.        If your monthly payments are to include property taxes and insurance, a new escrow account (“impound” or reserve) is established.

6.        You receive the keys to your new home!

Key Closing Documents You'll Need To Receive

HUD-1 Settlement Sheet
This itemizes the services provided and the charges to the buyer and the seller. You should be allowed to review this form shortly before your closing meeting so you know your closing costs in advance.

Truth-in-Lending (TIL) Disclosure
You should be mailed your initial TIL disclosure within three business days of applying for a home loan. It outlines the costs of your loan and discloses the annual percentage rate (APR) and other terms of the loan, including the finance charge, the amount financed, the payment amount and the total payments required. Since it's possible that the APR calculated at the time of your loan application will change a little before closing, your lender is required to give you the final version of your TIL disclosure at or prior to the closing meeting.

Deed of Trust or Mortgage (also known as the Security Instrument)
This document conveys a lien in your property as security for repayment of your home loan. (This means that if you default on your loan, your lender has the right to foreclose your ownership interest and take possession of the property).

The Note

The mortgage (or promissory) note represents your promise to pay according to the agreed terms. It includes the dates on which your home loan payments must be made and the location to which the payments must be sent.