Understanding the Mortgage Closing Process

by 20 Aug 2012

If you’re in any stage of the mortgage closing process, then you are probably familiar with the notion that the world of home mortgage is a confusing, frustrating and sometimes downright illogical world. In order to combat all that confusion, frustration and illogical train of thought, it will do you a bit of good to truly understand the mortgage market and understand the whole mortgage closing process.

The good news is that if the closing process has started it is already nearing completion. The pain, frustration and confusion can give away to relief, happiness and maybe even just a tinge of elation at any moment. Depending on the property and the nature of the local mortgage market, the closing process can take a seemingly long period of time, or it could be over just as quickly as it begun. Once the actual closing day has finally arrived, it seems to end abruptly and before the prior homeowner even realizes what happened. Here is a step-by-step breakdown of how the closing process will go down on closing day:

The closing day is when both parties (the seller and the buyer) sign the papers, and make the transfer of the property official and legally binding. This is when you will either buy the property or take ownership of the property, depending on which side of the fence you are sitting on. This is also when all the changes will be made to the document to ensure that each respective side is happy with the deal. The devil is in the details when it comes to a mortgage deal, and often those details will not truly be fleshed out until closing day.

To ensure an accurate and efficient deal on closing day, it is imperative to go over the mortgage deal with a fine toothed comb the day before the closing day. All the papers must be in order, and if you have all of them organized and ready to go, the closing day will go by much quicker and much smoother. These papers are the good faith estimate, the contract, the proof of title search insurance, the proof of homeowners insurance and mortgage insurance. A walkthrough of the home is also something that usually occurs on closing day. This is a way to make sure that each party notices any damages in the house and come to an understanding on all the details. If any major problems are noticed during the closing day meetings, then the signing of the paper work may be delayed until the problem is solved and both parties are happy with the deal.

The next step is transferring the funds. Typically all the closing costs are paid on closing day, along with the escrow payments. Borrowers tend to handle most of the cash transactions on closing day because they are the one who is actually buying the property.

While the actual closing procedure for a home mortgage can vary depending on which state you are in, there is usually a few people that are always present for the signing of the papers on closing day of the mortgage deal: a closing agent (who typically works for the mortgage company,) an attorney (which may be accompanying the closing agent and is therefore also a representative of the mortgage company,) other attorneys (who may be representing the buyer and/or the seller,) a title company representative, a home seller and the seller’s real estate agent. So, it may be a crowded house on closing day, which adds to the anxiety.

When all those people come to an agreement, and the five legal documents, which make up a home mortgage deal, are signed and notarized closing day is done. The closing process is actually much simpler than it seems (well, usually anyway) and usually people are just stressed out because they do not know what to expect. It is always better to be over-prepared as opposed to under-prepared.

Karl Stockton writes for bail bond agencies.



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