How to be prepared for what will happen.
Many buyers find closing day to be a whirlwind. Everything is going to move fast. It is in your interest to understand what’s going on, what you’re signing, and what to expect in closing costs. Being prepared can help relieve anxiety and help you focus on what this day is really all about—owning your new home.
What to expect
Depending on what state you live in, there are a number of people involved with your new home purchase that may attend your loan closing. This may include you, the seller(s), their attorney (if they have one), your attorney (if you have one), both real estate professionals, the builder’s representative (if a brand new home is involved), a lender’s representative (optional) and the closing agent. The meeting may take one hour or longer and is held at the closing agent’s office.
You may live in an area where there is no formal closing meeting. In that case, an escrow agent, a closing agent, or an attorney processes all the paperwork, arranges for all documents to be signed, and collects and disburses the required funds.
Here’s what usually happens during and after closing:
- There is a lot of paperwork at closing, and all of it needs to be reviewed and signed. Signatures are collected for loan documents, such as the settlement statement, mortgage or deed, the promissory note, and Truth-in-Lending statement. Evidence of required insurance and inspections is also presented. Make sure that each document is explained clearly and that the terms are what you agreed to.
- If everyone agrees that the papers are in order, you submit a certified or cashier’s check to cover your down payment and closing costs. Or, in some cases, this money is drawn from an escrow account established for your home purchase.
- The lender provides a check covering the home loan amount to the closing agent.
- Depending on your loan, your monthly payments may include property taxes and insurance. If that is the case, a new escrow account, or reserve, may be established.
- When all is signed and the transfer of funds is complete, you receive the keys to your new home.
Review your HUD-1 Settlement Statement in advance.
One of the main items to review and/or sign at the closing is the HUD-1 Settlement Statement. This document itemizes the services provided and the charges to the buyer and the seller. You should be allowed to review this form before your closing meeting so you know your closing costs in advance. Make sure to request the HUD-1 form from the escrow agent at least 24 hours in advance of the closing meeting.
If your HUD-1 Settlement Statement is much higher than your Good Faith Estimate, if you see a different rate on your loan than you had agreed on, or if there are any additional clauses in your paperwork that you weren’t prepared for, do not sign anything until you can resolve these issues with your lender. If you can’t resolve them and you haven’t signed anything, you are always free to walk away. Don’t feel pressured—after all, it is your money.
Bank of America offers Clarity CommitmentTM, a one-page loan summary. Learn more.
Find out more about other documents to review and/or sign at closing in the learning center.
And take a look at our new interactive Bank of America Home Loan Guide.
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