All the prep work has been done and your lender has told you your closing papers are being prepared and delivered to your escrow officer or settlement agent. A lot was said and done since the time you first spoke with a loan officer and began asking a series of questions on qualifying, applying for a loan, closing costs, pretty much every question you could possibly ask. After you submitted your application and provided the lender with needed documentation, you requested and received your preapproval letter. This is the letter that all sellers in today’s environment want to see.
Depending upon your local market and how many days homes are listed on the market before sale, your search for a home could take a couple of weeks to a couple of months. Once you finally find the perfect home, you make an offer, it’s accepted, and the clock begins to tick. Your sales contract will have a closing date prominently listed on the first page and it’s time to go to work. Your lender receives a copy of the sales contract and begins processing and approving your loan. For many contracts, a 30-45 day closing period is common.
Your lender orders services from various third parties such as your appraisal and title work among a host of other needed services. Once all the required documents are in the file, the loan is transferred over to the underwriting department which verifies the loan file meets all the approval requirements for the selected loan. Once that determination is made, your loan is electronically submitted to your settlement agent.
The settlement agent will then prepare an estimated settlement statement, commonly referred to in the industry as the HUD-1, today the statement is referred to as the Closing Disclosure. This statement will show how much you’re going to borrow and how much you’re going to need to bring to closing. Just as with the initial closing cost estimate you received from your lender, each individual charge is itemized on the statement for you to review.
The statement is prepared and delivered to the lender for a review. You will also receive this statement for you to review as well. By law, you’re supposed to receive this statement at least one day before your scheduled closing. Your sellers will also receive this statement and itemize all charges the sellers are responsible for paying.
When you receive the closing disclosure you’ll want to compare what you see with the initial cost estimate you reviewed, signed and returned to your lender very early on in the home buying process. The final numbers must closely match what you were originally disclosed. Lender fees cannot vary at all. If for example a processing fee was disclosed to you at $300 and the final amount is $400, you’re not allowed to pay that difference. If certain third-party charges are different than originally disclosed, the aggregate variance cannot exceed 10% of the original closing cost quote.
Once the determination has been made the listed costs and final cash to close is correct, you will then schedule a time with the settlement agent for a closing. In most areas of the country the buyers and sellers attend closings at different times but in other areas both parties attend the signing at once.
The final cash to close from you can come in the form of a cashier’s check, from the proceeds of a current home you’ve sold or with a bank wire. The most convenient, and preferred by the settlement agent, is a direct wire.
When signing your closing papers, you’ll notice that many of the documents are ones you’ve previously signed. In this instance, the papers need a “wet” signature. A wet signature is simply signing again with a pen. There are multiple documents needing your signature or initial and your settlement agent will present them to you one-by-one. Upon completion, the settlement agent then forwards the signed documents back to your lender for one final review. You may or may not receive the keys to your property at the time of your closing. That’s up to the discretion of the sellers. But your loan is not official until the lender says so.
When the lender receives the signed documents, the final review makes sure the settlement agent followed the lenders instructions exactly. Once that has been determined, the lender sends a special code that releases the funds needed from the bank to the settlement agent. At this stage, your home loan is funded. You’re now a homeowner!
Coast 2 Coast Lending offers an assortment of mortgage programs to home buyers in multiple states. Please contact us today to learn more about a particular loan program, we have agents standing by 7 days a week to help.