"Clear to close."
These are the three most anticipated words in the mortgage industry. When underwriting utters that magic phrase, loan officers and borrowers heave a deep sigh of relief. The deal is done—no more paperwork, no more invasive questions, no more spending your evenings struggling to find obscure documentation, and no more being a renter.
But the deed is not officially done. You still have to grab your blue pen and get ready to sign on a lot of dotted lines. Let's look at everything you can expect in the process.
Getting to the Closing Table
Before we look at the finish line and signing your closing package, though, let’s discuss how you got there, beginning with your initial loan approval.
Your primary job during the time your loan is still in underwriting is simple. Move as quickly as possible to honor document requests, answer questions and do anything else that is needed to get you to the closing table. No matter how ridiculous you think the doc request is, you just have to jump through the hoops as quickly as you can.
Your Closing Disclosure
You have seen a blizzard of mortgage disclosure documents since you started the closing process—initial disclosures, redisclosures, and possibly even more redisclosures. The sheer volume of paper can easily make first-time buyers dizzy.
Closing Disclosure Changes
Closing costs, escrow amounts, interest rates, and cash to close are all included on your closing disclosure, which will look a lot like your initial loan estimate. You'll want to compare these two documents to see what has changed since your initial estimate.
It is not uncommon for property taxes and homeowner's insurance to be misquoted on the estimate. That's because these final amounts depend on exact quotes from your insurer or the most recent tax valuation from your property tax assessor.
Other costs that can change from your initial loan estimate to the closing disclosure include:
- Prepaid interest totals
- Initial escrow account deposits
- Fees for third-party services that the lender does not require
- Recording fees (by a maximum of 10%)
- Fees for certain required services if you chose a third-party provider from the lender’s approved list of providers (by a maximum of 10%)
You could also see some costs change if you took out another loan (say, for a car) since your initial estimate or your credit changed in some other way. Ultimately, the amounts on your closing disclosure will be close to the loan estimate, but there could be some noticeable differences, and those costs can add up.
This three-day period before closing is your last chance to review these costs and follow up with your lender if you have any issues.
Who Will Be at the Closing Table?
The exact setup of your mortgage closing will depend on your state's laws and how the parties involved typically handle the process. In some cases, you may even be able to close remotely, without ever setting foot in the title office.
On closing day, you'll typically meet with any or all of the following parties:
- Your real estate agent and the seller's agent
- The seller
- A representative from your title insurance company
- Someone from the escrow company
- Your attorney or the seller's attorney (if your state requires this or you request it)
- Your lender
Signing Your Closing Documents
Once all parties have gathered (if your state requires everyone to close together at the same time), you'll need to be ready to do a lot of signing and, of course, hand over your cashier's check to pay your down payment and closing costs. The docs you sign at the closing table should mirror your final set of mortgage disclosures (and should be fairly similar to your original set of disclosures too). Someone will guide you through each document, explaining what it means, where to initial, and where to sign.
Expect to sign or initial at least 50 pages of documents with your legal name.
Once the closing docs are signed by both you, any co-signers no the loan with you, and the seller, they will be faxed/scanned to your mortgage lender's closing department. In some cases, these docs are required prior to funding your loan and paying the seller. In other cases, the funds have already been wired and are waiting with the closing docs.
Once the documents are signed and the loan is funded, you are officially a homeowner. Your agent will hand over the keys and you can go check out your new home.