Yes! You did it! You’re about to close one of the biggest financial transactions of your life. You’re well on your way to becoming a homeowner. But there’s still work to be done. And the most important order of business? Make sure that the mortgage closing goes smoothly.
To help you prepare for the big day here is a guide of what to do's and who to involve.
When and where does closing happen?
Closing can happen anywhere. You can close at the real estate attorney’ s office, at the titling office, or at the actual property location! What is critical is that you coordinate with the different parties and finalize a closing schedule where everyone is available. Inform the parties at least three days before your intended closing date. A heads up gives everyone enough time to prepare documents and forms.
Who needs to be there?
You and the seller should be present at closing. You may invite both of your attorneys to join you as well. Real estate agents, NewCastle representatives, the notary public, and the titling company’s representatives must also be there. Of course, the closing agent is there to facilitate the process.
What Documents Need To Be Signed?
Expect to sign different documents at closing. These documents are:
- Closing Disclosure: You'll receive a copy of the disclosure three days before the closing so you can review the details. The closing disclosure follows the terms of the contract. It also contains the itemized list of your final charges, fees, and credits.
- Deed of Mortgage/Trust: Deed of Trust transfers the legal title to a trustee, who will safe keep it as security for the mortgage. If you are unable to repay the loan, the trustee is responsible for beginning the foreclosure process.
- Promissory Note: This document represents your commitment to repay the mortgage, based on the agreed terms. The promissory note will include the amortization schedule and where you should address the payment. More importantly, the promissory note details the consequences when you fail to pay.
- Initial Escrow Disclosure (for Escrow account holders): This statement itemizes the amount you have to pay into Escrow monthly. (link to blog about escrow)
- Certificate of Occupancy: Applicable to newly constructed properties, this document certifies that the property is safe for occupancy.
Remember to review the document carefully before signing. Make sure to check the following details:
Are your personal details correct and consistent in all the forms?
Do your loan terms, interest rate, and monthly payment reflect the agreed upon terms, including the latest changes? Are these key figures consistent across all the documents?
Are there terms in the documents you don't understand?
Do you know all the fees and charges you're paying?
If you have additional questions, ask the different representatives during closing and before signing. If you see anything is out of place or not as expected, bring it up.
What Are The Costs?
Closing costs include:
Lender fees: Origination fee, mortgage broker fee, discount fee, processing fee, underwriting fee, application fee, commitment fee, lock-in fee
Order services fees: Credit report fee, flood certification, tax service fee, wire transfer fee, courier/postage fee
Upfront fees (if applicable): USDA loan fee, FHA loan fee, VA loan fee
Third party fees: Appraisal, pest inspection, title report/insurance, escrow/settlement/closing fee, notary fee, closing protection letter, survey fee, attorney fee
Government processing charges: Recording fee, transfer taxes
Prepaid items: Homeowners insurance, flood insurance, tax reserves, mortgage insurance, prepaid daily interest charges[RE1]
Payment of points (if applicable)
You can review closing costs in your Loan Estimate and Closing Disclosure.
Important: Bring a cashier’s check or proof of wire transfer to settle your closing costs. Never bring cash.
What comes after?
Congratulations! You signed the documents. You paid the fees. You got the keys. Now, you are ready to move in. But remember; your home buyer’s journey is not over yet. We are here to help you transition to the next chapter: Paying off your mortgage.
You can make your first loan payment to NewCastle Home Loans and mail it to 1700 W. Cortland Street, #207, Chicago, IL 60622. Don’t worry; we will manage your account until we formally transfer your loan to your new loan servicing company. We will send you a formal notification, with payment instructions. Your new loan servicer will also send you a welcome letter and payment instructions. Good luck!