Settlement - What to Expect
The real estate closing is the meeting at which the sale is finalized and you assume official ownership of your new home. Money is exchanged and forms (many forms!) are signed. By the end of the meeting, the property is yours!
Most closings are actually two separate closings: 1) closing on the purchase of real estate 2) closing on the mortgage loan that you are taking out to make the purchase. Documents you can expect to see at closing include:
Settlement Disclosure Statement:
This disclosure document is required by Federal Law and is intended to disclose to the borrower an estimate of the annual cost of the loan AND the total cost of the loan over the full term – including all costs and fees associated with obtaining the loan.
ALTA Settlement Statement:
This Federal form is the statement that outlines all charges being assessed to both the buyer and the seller.
The note is simply your agreement to repay the borrowed funds to your lender. The note will include the terms and conditions as well as the manner of repayment options.
Deed of Trust:
The Deed of Trust is the legal security instrument that establishes the lenders lien on the property for the amount of the loan. It also secures the home as collateral for the repayment of the loan.
Loan Commitment Letter:
This letter from your lender will confirm the terms of the loan, interest rate, and length of the loan. It will also note any other requirements such as hazard insurance, survey, or termite inspection.
Your lender will typically require you to sign a printed copy of your loan application that you previously provided during the loan application process. You will verify that the information is correct and that there are no major changes to your employment, income, debts, etc.
This document includes any other names you are known by that may have been included on your credit report or other loan processing documents
The Flood Insurance document will indicate whether or not your property is located in a possible flood zone. If is it, the lender may require you to carry a flood insurance policy on the property.
Your lender might require you to sign written instructions to the Tax Authority instructing them to bill your lender for future tax payments.
If a termite inspection was required or performed as part of your contract, you will likely sign a copy of the termite inspection report at settlement.
This IRS form is completed and submitted to the IRS so you can make mortgage interest deductions come tax season
After your settlement, the closing company will finalize and record documents by completing the following: record the deed or deed of trust in the land records at the courthouse, audit the disbursement instructions, disburse proceeds, issue the title insurance policy, send signed loan documents to the lender, pay off the seller’s lender, and obtain record of release of the Seller’s Deed of Trust.