The Mortgage Loan Closing Process

The mortgage loan closing process is the last part of buying a home. However, many homebuyers find it as the most perplexing stage. For one, closing a home loan involves a lot of paperwork. Sure, you can opt to get the services of a closing agent, but knowing what to expect will allow you to prepare the requirements, complete the process faster, and also save money, time, and effort.

Documents Required in Mortgage Loan Closing

After you receive notification from your mortgage provider (or closing agent) that it is time for you to close your home loan, you need to prepare the required documents. Many of the papers need to be signed and reviewed by other parties, such as the assessor and surveyor, who have been involved in the purchase of your new home. You need to prepare such documents early. Below are the typical paperwork needed when closing a home loan.

  • HUD 1 Settlement statement
  • HUD 1 Addendum
  • Good Faith estimate
  • Truth in Lending statement
  • Assumption statement
  • Escrow statement
  • Assessor’s statement
  • Statement of Prepayment
  • Deed of Trust or Mortgage Deed
  • Affidavit stating the absence of outside agreements
  • Loan application
  • Loan application supplementary documents
  • Promissory Note
  • Affidavit of Lien
  • Affidavit of Encroachment
  • Deed of Warranty
  • Survey documents and reports
  • Disclosure and Receipt of Survey
  • Termite Certification
  • Insurance Certificate
  • Flood Zone Certification
  • Previous owner’s Proof of Title

Typical Costs Involved in Mortgage Loan Closing

As the homebuyer and borrower, you will definitely incur numerous costs on top of your new home’s purchase price. You can opt to have some of these items added to your total loan, which means your mortgage provider will initially cover such costs. Still, other expenses needed to be paid out of your own pockets. Prepare to shell out money for the following:

  • Down payment for the property
  • Closing costs
  • Costs associated with escrow items
  • Mortgage processing fees
  • Closing agent fees
  • Documentation costs

Important Steps in Closing a Home Loan

  1. After gathering all the required documents, you need to check if all the terms stated therein are what you have agreed to. You can ask for further explanations if some items are not clear to you.
  2. If everything is good on your side, you can sign and submit all the required documents.
  3. After the other parties involved approve that everything is in order, you will be asked to issue a cashier’s check for the down payment and related closing costs. These costs can also be drawn from an escrow account if you have established one for use in your home buying.
  4. Your mortgage provider will draw a check amounting to your total home loan and issue it to your closing agent who will turn it over to the home seller.
  5. Depending on the terms of your loan, you may have to shoulder property insurance and taxes on top of the agreed monthly payments. If so, you can set up an escrow account to cover such costs.
  6. After all the parties have signed the mortgage loan closing documents and the fund transfer has been made to the seller, the home buying transaction is completed and you now own the property.




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