Unit 3 : Lesson 2: How to shop for a mortgage loan

Step 4. The closing

The last stage of home buying is the mortgage loan closing. In some parts of the country this is called the settlement. This is the meeting in which the final steps are taken to complete your purchase. The closing date is set after your loan has been approved and you accept the commitment letter. The seller, your lender, a closing agent, the real estate agent, and sometimes attorneys for you, for the seller, and for the lender may be present at the closing. Often, the real estate agent will be the person to set a date when everyone can attend.

In various parts of the country, the person or group chosen to handle the closing (called the closing agent) is different. Sometimes the lender is the closing agent. Other times, special companies called title insurance companies or even attorneys for the buyer or seller will be the agent for the closing. You may have some choice about who handles the closing.

Many people find the closing the most challenging part of the home-buying process. You may be surprised at how many legal papers you must sign at the closing. You will often hear the forms you must sign called legal documents.

The Looking further section covers some of the most important documents. When you apply for a loan, your lender should give you a copy of the government publication A Home Buyer’s Guide to Settlement Costs. It will give you more information. If you need help with details, have questions, or just want to check to make sure that all the documents are completed correctly, you may be able to get help from your community housing agency. Or you can consult a real estate attorney. Your lender should tell you in advance exactly what costs you will be responsible for and how much they will add up to.

You can get a settlement statement one day in advance of the closing so you can look it over. The settlement statement will tell you how much you will be expected to pay at the closing. Personal checks are usually not accepted at closing. You must get special checks from the bank, such as a certified check or a cashier’s check. You will need to know the exact amount for each check. And remember, don’t forget to keep copies of everything you sign!

Usually the day before the closing, the buyer makes a final walk-through inspection of the house. This gives you a chance to make sure the seller has moved everything out and left behind everything you agreed upon (such as the refrigerator and stove). This is your last chance to make sure everything such as the plumbing, heating, and electricity work.

If you notice major problems during the walk-through inspection, you have the right to hold up the closing until the problem is fixed. Or you may be able to arrange with the seller to pay you an additional amount to cover expenses needed to fix the problem.

For the Millers, the closing was a big event! They had taken care of everything in advance and had all the checks for the correct amounts ready. The day before the closing they had done a final walk-through of the house to make sure everything was in order. The house looked even better than they had remembered!

When they finally finished signing all the papers, there was only one problem. The seller had forgotten to bring the house keys! “You’d be surprised how often this happens,” the settlement agent laughed. The seller quickly drove home and got the keys.

The Millers drove to their new house with their two children. They couldn’t wait to see their new home!

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