Closing Day

Closing Day on your loan is when you sign the final documents, get the keys to your new space, and become an official property owner. In most cases, the closing is a formal meeting where the buyer and seller, their respective attorneys and real estate agents, and representatives from the lending and title companies complete the sale and financing transaction. Bring your attorney to review the documents before you sign them. At the closing, you will be asked to sign many documents, including:

• HUD-1 Settlement Statement: Both buyer and seller sign this statement, which lists the costs and charges to both parties and is required by federal law. You do not need this document if you have a commercial mortgage. 
• The Note: This is your promise to pay the lender according to the terms specified in the mortgage. It provides the details regarding repayment of the mortgage, including payment dates and penalties for falling behind.
• The Mortgage or Deed of Trust: This legal document secures the note and gives the lender a claim against your property if you default on your loan. In other words, the mortgage gives the lender partial ownership until the loan has been paid in full. It outlines the borrower’s responsibilities to pay principal, interest, taxes and insurance on schedule, to maintain homeowner’s (hazard) insurance on the property at all times, and to keep the space properly maintained. If you violate the terms of this agreement, the lender assumes the right to foreclose on your property, sell it and use the proceeds to pay off the outstanding loan debt, as well as all costs the lender incurred during the foreclosure process. You will receive any leftover funds after all bills to the lender have been paid.
• The Deed: This document transfers ownership of the property from the seller to you.
• Truth in Lending Disclosure: Summarizes the actual costs associated with the loan you have obtained.
• Additional Documents: Depending on the type of loan you have, or the program you are using, you might have to sign additional documents required by state law, the lender or other parties at the closing. Be sure you and your lawyer review all documents before you sign them.

Now that you’ve signed all the documents and received your keys . . . welcome to the wonderful world of ownership!