There are a few important stages or benchmarks that you'll cross during the homebuying experience, and the one that many prospective buyers look forward to most is closing day. Referring to the day where final documents are signed and ownership of the home is transferred over from the seller to the buyer, closing day can be an exciting time, but it's also one where you have to be sure all loan details are in order.
When you contact the mortgage professionals at Supreme Lending, you'll get assistance with every step of the mortgage process, from pre-qualification and assistance with finding the ideal loan program, all the way through closing day and beyond. If you're approaching closing day for your home purchase and looking to ensure you're fully prepared, here are some components to prepare for.
In-Person or Hybrid eClosing
In pre-pandemic times, it was common for most closing day appointments to be carried out in-person, with several of the important parties all in one place.
In recent years, technology enhanced loan closing. More closings are carried out virtually than ever before, aided by modern technology that allows all the key figures to be on a call or video chat together, with select documents able to be shared and signed electronically.
If you're set on a traditional in-person closing, that's still an option. But if you'd prefer to close virtually or are open to either method, that's also an avenue to pursue. There are even situations where closing may be carried out by mail, though these are much less common now that improved technological options exist.
What Will You Need?
Whether you're attending closing in-person or doing a hybrid eClosing, you'll need several important items or documents:
- Proof of identity: First and foremost, you need to be able to confirm your identity. A passport or government-issued ID should suffice, but if you don't have either of those forms, other options like a driver's license or birth certificate could work as well.
- Closing disclosure: The closing disclosure is a vital document that you should receive at least three days before closing. It contains all the final details about your loan, including interest rate, monthly payments, and other essential information.
- Funds for closing: You'll need to bring a cashier's check or arrange a wire transfer for your closing costs on the day of closing. Your real estate agent or closing agent will be able to give you a good estimate of what these costs will be in advance.
- Home insurance policy: If required, you'll need to show proof that you have a home insurance policy in place before closing can be finalized. This is to protect the lender's interest in the property in case of any future damage or default on the loan.
Who Will Be Involved?
In addition to yourself, there will generally be at least a few other parties present for closing. These include:
- Closing agent: Generally employed by either the lender or the title company, a closing agent is responsible for conducting the closing itself and ensuring that all the proper documents are signed.
- Buyer's attorney (if applicable): Many buyers choose to have an attorney present at closing, especially if they're a first-time homebuyer. An attorney can help explain any complex legal language in the documents and ensure that your interests are protected.
- Title company representative: A title company representative will usually be on hand to ensure that the property's title is free and clear of any liens or encumbrances. They may also coordinate the disbursement of funds at closing.
- Seller's attorney (if applicable): Similar to a buyer's attorney, a seller's attorney is present to protect their interests and ensure that all the paperwork is in order.
- Seller: In some cases, the seller may choose to be present for closing. This isn't always the case, but it's not uncommon either.
- Your bank or lender: While not always required, your bank or lender may send a representative to closing.
What Happens on Closing Day?
Once all the parties are gathered together for the closing appointment, the process of closing itself will commence. The main item of interest here: signing documents.
You'll have to sign at least three major documents as a buyer, and often more, during the closing period. These are:
- The closing disclosure: As previously discussed, the closing disclosure is a document that outlines all the final details of your loan including the interest rate, monthly payments, and closing costs. You'll need to sign this document before closing can proceed.
- The promissory note: The promissory note is a binding legal document in which you agree to repay your mortgage loan. This document will also include information like your loan's interest rate and repayment terms.
- The mortgage or deed of trust: The mortgage (or deed of trust, in some cases) is a document that pledges your home as collateral for the loan. In other words, if you default on your loan, the lender can foreclose on your home.
Don't simply sign these documents without first taking the time to read and understand them. These are all binding legal agreements, and you don't want to inadvertently agree to something that isn't in your best interests. If anything looks confusing or you're not sure what you're agreeing to, be sure to ask questions and get clarification before moving forward.
Once all the documents have been signed, you'll also want to review the bill of sale, which outlines the final sale price of the home and any personal property that's included in the sale. This is just for your own records and isn't required to be signed, but it's still a good idea to take a look.
After all the paperwork has been taken care of, the closing agent will then coordinate the disbursement of funds, and you'll receive a closing packet. Then you'll get the keys, and you can take ownership of your new home!
For more on how to prepare yourself for closing day for any mortgage, or to learn about any of our mortgage rates or home loan services, contact the team at Supreme Lending today.