Preparing for Your Mortgage Closing – What You Need to Know

The mortgage closing is the final step in your home-buying journey, and it’s when all the hard work comes together. Once you’ve gone through the loan approval process, had your home inspected, and completed the appraisal, the last task is to close on the mortgage and officially become a homeowner. Knowing what to expect and how to prepare will ensure that your closing goes smoothly and without surprises. Here’s a helpful guide to walk you through everything you need to know to be ready for your mortgage closing.

1. Review the Closing Disclosure

One of the most important documents you’ll receive before your closing is the Closing Disclosure. This document outlines all the details of your mortgage, including the loan amount, interest rate, monthly payments, and closing costs. You’ll receive this at least three business days before your closing date, which gives you time to review it thoroughly.

• Compare to Your Loan Estimate: The Closing Disclosure should closely match the Loan Estimate you received when you first applied for the loan. If there are any discrepancies, contact your lender immediately for clarification.
• Double-Check Key Details: Make sure all the information—such as the loan term, interest rate, and personal information—is correct.

The three-day review period allows you to address any questions or concerns before closing day, so don’t hesitate to reach out to your Loan Officer if something looks off.

2. Bring the Necessary Documents

You’ll need to bring several key documents to your closing to finalize the mortgage. Here’s what you should prepare:

• Photo ID: Bring a government-issued photo ID (such as a driver’s license or passport) to verify your identity.
• Cashier’s Check or Proof of Wire Transfer: Closing costs and your down payment will need to be paid on the day of closing. These funds must typically be in the form of a cashier’s check or a wire transfer, so be sure to confirm the amount you owe in advance. Your Closing Disclosure will outline the exact figure.
• Proof of Homeowners Insurance: Most lenders require proof of homeowners insurance before you can close on your mortgage. Make sure you have your insurance binder or proof of coverage ready.
• Any Additional Documents Requested by the Lender: Your lender may ask for additional documents based on your specific situation, such as updated bank statements or employment verification. Check with your Loan Officer to ensure you’ve provided everything required.

3. Understand Your Closing Costs

Closing costs typically range from 2% to 5% of the home’s purchase price and cover various fees, including the loan origination fee, title insurance, and appraisal fees. Your Closing Disclosure will break down these costs, but it’s important to understand what they include:

• Loan Origination Fee: This is the fee charged by your lender for processing your mortgage.
• Title Insurance: Protects both you and your lender from any future claims or disputes over the property’s ownership.
• Prepaid Costs: This includes homeowners insurance, property taxes, and prepaid interest on your loan.

You’ll need to pay these costs at the closing, so make sure you’re prepared with the necessary funds.

4. Final Walkthrough of the Property

A day or two before your closing, you’ll have the chance to do a final walkthrough of the property. This is your opportunity to ensure that everything is in order and that the seller has completed any agreed-upon repairs.

• Check for Repairs: Make sure any repairs or modifications the seller agreed to are completed to your satisfaction.
• Verify Condition: Ensure the home is in the same condition as when you last viewed it. Check for any damage that may have occurred after your inspection.

If you notice any issues during the final walkthrough, bring them to your real estate agent’s attention immediately so they can be addressed before closing.

5. Prepare for the Signing Process

The closing process involves signing a lot of paperwork, so be ready for it to take some time. You’ll be signing various documents that officially transfer ownership of the home and finalize your mortgage. Some of the key documents include:

• Promissory Note: This is your agreement to repay the loan according to the terms set out by your lender, including the loan amount and interest rate.
• Deed of Trust: This document secures the loan with the property as collateral, allowing the lender to foreclose if you fail to make payments.
• Closing Disclosure: You’ll review and sign this document again to confirm that you understand the final terms of your mortgage.

Make sure to read everything carefully, and don’t be afraid to ask questions if something is unclear. Your Loan Officer or closing attorney will be there to guide you through the process.

6. Get the Keys and Celebrate!

Once all the documents are signed, and the funds are disbursed, the home officially becomes yours! You’ll receive the keys, and you can finally celebrate your new status as a homeowner.

The Bottom Line

Preparing for your mortgage closing may feel overwhelming, but with the right steps and guidance, it can be a smooth and straightforward process. By reviewing your Closing Disclosure, preparing the necessary documents, and working closely with your Loan Officer, you can ensure that everything goes off without a hitch.