What Happens at Closing

Finally!  The big day is here.  You’ve been waiting on this since your offer was accepted and you can’t wait to move in.  You’ve worked with your realtor searching out the house of your dreams.  You’ve worked with your loan officer to secure the loan.   All of a sudden you realize you have no idea what to expect.  Do the buyers and sellers sit down together?  Who will be at closing?  How many documents will I have to sign?  How long will this take?  Am I going to feel overwhelmed and under-informed?
We don’t ever want our clients to feel this way so let’s do a quick overview on how this process works.
How will you find out when and where Closing is? 
The title company will call you or your realtor to schedule a closing appointment.
Will the sellers be at the Closing?
The sellers and the buyers typically sign at different times on the same day. 
What do I need to bring to Closing?
You will need to bring a cashiers check made out to the title company.  The title company, your realtor, and / or your loan officer will call you to let you know the exact amount that the check needs to be.  You also need to bring a valid drivers license.
How long does a typical Closing take?
Usually, closing will only take about an hour.  But don’t feel rushed.  If there’s anything you have a questions about, ask it.  That’s what everyone is there for.
Who will be at Closing?
Usually, your realtor will accompany you to Closing.  As your loan officer, we also like to be there just in a case there are any loan questions that you may have during the signing.  The title company has an individual called a closer or closing agent who will present the documents and give you a brief explanation of each document you are signing.
If you are married, even if your spouse is not on the loan, they will need to attend closing.  Texas is a community property state and your spouse will need to sign the deed.
What documents will I sign at Closing?
Well, be prepared.  The closer will bring in a large stack of documents.  But don’t panic.  Most of them you’ve already seen when you signed the Disclosures.  There are just a few that really are the most important ones:
Most title companies will start with the HUD-1 Settlement Statement.  This document shows all the monies involved in the transaction.  It shows lender fees, title fees, government fees.  It shows who is paying what and what is being paid off.  This is the Bible when it comes to monies. 
Now let’s talk about the Deed of Trust.  The Deed is the document that transfers title of real property from one owner to another.  The deed should contain an accurate description of the property being conveyed and be signed according to the state laws where is the property is located.  This instrument gives the lender the right to foreclose without going to court in the event the borrower defaults on the loan.  The deed will be sent to you after the closing agent officially records the deed at your local government office. 
The Note is the actual loan.  It is a legal document that acknowledges a debt and promises to pay according to the agreed terms of the loan.  It also recites the penalties and steps the lender can take if you fail to make your monthly mortgage payments.
Warranty Deed with Vendor’s Lien is a document which officially puts a lien against the property being purchased until the loan indebtedness has been satisfied.  The closer will officially record this instrument with the local government office.  When the debt is paid off, a Release of Lien instrument will be recorded to notify the world that the financial obligation has been satisfied.
The Truth-in-Lending Statement is a required document by the Truth-in-Lending Act.  This document breaks down the monthly payments over the term of the loan, notifies you if it is an adjustable or fixed rate loan, if there is a pre-payment penalty, and shows the APR.  The APR is a means to where a borrower can compare apples to apples.  It is an expression of the true costs of the loan expressed in terms of a percentage. 
The Servicing Disclosure Statement lets you know whether the lender has history of selling the loans to another lender to service the loan.
The Initial Escrow Statement (if you are escrowing) itemizes the estimated taxes, insurance premiums and other charges anticipated to be paid from the escrow account during the first twelve months of the loan.  It lists the escrow payment amount and any required cushion.  An Annual Escrow Statement must be also delivered to the borrower once a year. 
Now, that’s not so bad…Those are the basic documents that you will sign.  There will be other documents but most are disclosures specific to your state, lender and/or loan type.  In some cases, you will have already signed most of them when your loan officer had you sign the Disclosure package.
If when the closing agent is going over these documents and you have any questions, do not be afraid to speak up.  This is your closing and everyone in the room is there to help you!