What Happens On Closing Day?
The day you purchase your new home is much different than renting a standard apartment. You, the seller and the lender must be present to transfer documents and sign paperwork for a legal property transfer. With all the excitement leading to holding a set of keys to the front door, you need to take a step back and evaluate all the paperwork necessary on closing day.
HUD-1 Form
Also known as the settlement statement, your closing agent should have this paperwork ready for you before or on closing day. Although it is a long list of itemized transactions and fees, be patient and read through all the information carefully. It should roughly match your “Good Faith” estimate you received at the beginning of the loan process. From underwriting fees to appraisal costs, the HUD-1 form displays all the final fees associated with your loan.
Truth-In-Lending Statement
To ensure that you are receiving the loan that was discussed previously with the lender, you should receive a truth-in-lending statement. This document shows the total principal financed, the interest rate and the payment structure. There should be no hidden costs on this document. It is actually a very simple listing of your financial commitment prior to gaining access to the property.
Property Transfer Paperwork
You must sign the mortgage note to show that you agree to pay back the lender. If you default, your signature also indicates that you understand the property will be sold by the bank to recover any balance or fee losses. A deed of trust is also signed, showing that you are the new owners of the property. This information is eventually transferred to the state for registry.
A sales contract is also drawn up by the seller, indicating their release of the property. It may also contain special stipulations you negotiated together, such as leaving the laundry center as part of the home transfer.
Retaining A Lawyer
Every state has a different law regarding mandatory lawyers at the closing day session. If you feel more comfortable, bring a lawyer to read over all the final paperwork. They can verify that everything discussed is listed correctly in the documents. Mistakes can happen, making an unbiased eye a helpful asset to the buyer.
Approach your closing day with triumphant flair. You are committing to a large asset that increases in value over time. Take time with the documents and you’ll be holding the keys to the front door in no time.
