Home Closings, How They Happen

Home Closings, How They Happen

The Mary Ellen Vanaken Team of Keller Williams Realty - http://www.mevhomes.com

Home closings and how they happen is not difficult once you understand the process. The mortgage loan closing for a home in Georgia is the meeting at which you take official ownership of the house. You will sign many papers and pay your closing costs at the meeting.   There will actually be two separate closings -  the closing of your loan and the closing of the sale. At the end of the meeting, you will receive the keys to your new home!

The closing process varies from state to state, and even within the same county or city. But, certain activities are standard. 

Closing Activities

Before closing, your lender, Buyer Agents Realty, and your closing agent will be handling many pre-closing activities. You need to be aware of them and who arranges and pays for each activity. 

No later than three business days after your loan application was received, your lender should have delivered to you a “good faith estimate” of the total charges due at closing and a copy of the government publication Settlement Costs: A HUD Guide. Then, one business day before the closing meeting, your closing agent must allow you to review a copy of your two-page settlement form -- called the HUD-1 Settlement Statement.

The good-faith-estimate is based on the lender’s typical loan origination costs for the area where your home is located. The estimate usually changes between application and closing. You will want to review your settlement form before the closing meeting. It will show you the actual amount of money you’ll need to bring to closing. You will need to pay your closing costs in the form of a certified or cashier’s check. Personal checks aren’t typically accepted. 

Closing costs vary widely depending on price, location, and other factors. You can expect closing costs to amount to between 3 percent and 6 percent of the sales price.

What Happens at Home Closings:

The closing meeting is where ownership of the home is officially transferred from the seller to you, the buyer. Your closing agent coordinates all of the document signing and the collection and disbursement of funds. Your role at the closing is to review and sign the documents related to the mortgage loan and to pay the closing costs. 

The closing is a formal meeting typically attended by the buyer and the seller and their attorneys if they have them, both real estate sales professionals, a representative of the lender, and, the closing agent.   The meeting takes approximately one hour.

Here is what happens during and after the closing meeting:

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

2. The closing agent asks you to sign the other loan documents, such as the mortgage note and Truth-in-Lending statement. Evidence of required insurance and inspections is also presented (if it wasn’t previously given to the lender).

3. If everyone agrees that the papers are in order, you and the seller submit a certified or cashier’s check to cover the closing costs and the balance of funds due (if applicable). The check from the lender covering the mortgage amount is submitted to the closing agent.

4. If the lender will be paying your annual property taxes and homeowner’s insurance for you, a new escrow account (or reserve) is established at this point.

5. Keys are presented to you for your new home.

6. After the meeting, the closing agent officially records the mortgage and deed at your local government clerk’s office or registry of deeds. This legal transfer of the property may take a few days after closing. The closing agent usually will not disburse the funds to everyone who is owed money from the sale (including the seller, real estate professionals, and the lender) until the transaction has been recorded. It is at the point of deed recording that you become the official owner of the home.

Closing Documents You Receive:

You will receive several important documents at the closing. Review this list of documents before you go to the closing table, so that you will be prepared for the documents that you will receive.

HUD-1 Settlement Sheet

The settlement sheet itemizes the services provided and lists the charges to the buyer and the seller. It is filled out by your closing agent and must be signed by both you and the seller. You should have been allowed to review this form on the business day before your closing meeting so that you will be able to know your closing costs in advance. 

Truth-in-Lending (TIL) Statement 

Within 3 business days of applying for a loan to purchase a home, your lender should have given you this document, which outlines the costs of your loan. You receive it at that time so that you may compare the loan costs with those of other lenders. The TIL statement discloses the annual percentage rate (APR). The APR is the cost of your mortgage as a yearly rate. This rate may be higher than the interest rate stated in your mortgage because the APR includes any points, and certain other costs of credit. The TIL statement discloses the other terms of the loan, including the finance charge, the amount financed, the payment amount, and the total payments required. 

It is possible that the APR calculated at your loan application will change at closing. That is why your lender is required to give you the final version of your TIL statement at or prior to the closing meeting. 

The Note 

The mortgage (or promissory) note is a legal document that represents your promise to pay the lender according to the agreed terms of the loan, including the dates on which your mortgage payments must be made and the location to which they must be sent. 

The note details the penalties that will be assessed if you fail to make your monthly mortgage payments. It warns you that the lender can require full repayment before the end of the loan term if you violate the terms of your note or mortgage. 

The Mortgage

The mortgage is the legal document that secures the note and gives the lender a legal claim against your house if you default on the note’s terms. You have possession of the property, but the lender has an ownership interest (called an “encumbrance”) until the loan has been fully repaid. 

The mortgage restates the basic information found in the note. It states your responsibilities to pay principal and interest, taxes, and insurance on time; to maintain hazard insurance on the property; and to adequately maintain the property and not allow it to deteriorate. If you consistently fail to meet these requirements, the lender can demand full payment of the loan balance or foreclose on the property, sell it, and use the proceeds to pay off the outstanding loan and the foreclosure costs. 

In some states, a “deed of trust” is used instead of a mortgage. By signing a deed of trust, you receive title to the property but convey title to a neutral third party (called a trustee) until the loan balance is paid. 

Affidavits

You may be asked to sign affidavits. For example, you may be required to sign an affidavit of occupancy, which states that you will use the property as a principal residence. Or you and the seller may need to sign an affidavit that states that all of the improvements to the property that were required in the sales contract were completed before closing. Ask your lender whether you’ll be required to sign any affidavits at closing. 

The Deed 

Only the seller signs the deed at closing. It is the document that transfers ownership from the seller to you. Your name and the names of any other buyers appear on the deed. You’ll receive a copy of the deed at the closing. The closing agent then records the deed (with you listed as the new property owner). The deed will be sent to you after it is recorded. 

Looking to buy in the North Atlanta Communities of Alpharetta, Cumming, Roswell, Duluth or Milton Georgia? Contact The Mary Ellen Vanaken Team of Keller Williams Realty today to begin your search.

Home Closings, How They Happen