Closing escrow is an exciting milestone in the home buying journey. As experts in real estate, House Of Palmer is here to guide you through the final steps. In this blog, we'll walk you through what to expect at the closing table, from the lender's "clear to close" to signing documents and understanding closing costs. Let's dive in!
Lender's "Clear to Close" and Waiting Period
After finalizing your loan application, the lender conducts a thorough review to ensure all requirements are met. Once they issue the "clear to close," it means your loan has been approved. Your lender will then provide you with your final Closing Disclosure (CD), which details all of the loan terms and lending costs.
However, before signing the closing documents, there is mandatory three-day (business day) waiting period after you receive the Closing Disclosure required by lending regulations. This period allows time for final loan documentation and funding preparation.
Understanding the Closing Statement
The closing statement, also known as the settlement statement or HUD-1, is a detailed breakdown of the financial transactions involved in the closing process.
It outlines the final terms of the loan, purchase price, closing costs, and adjustments. Review this document carefully to ensure accuracy and address any questions or discrepancies.
Your agent will also recieve a copy to help with the review process by making sure that the financial agreements of the contract are included. Whether that be the purchase price, shared closing costs, seller concessions or funds agreed on during the inspection process.
Signing the Documents
During the closing, you'll be required to sign various legal documents. These may include the promissory note, deed of trust or mortgage, and other disclosures.
The signing process typically takes around an hour, but it can vary depending on the complexity of the transaction. Your agent and escrow officer will be present to answer any questions and guide you through each document.
Breakdown of Closing Costs
Closing costs encompass various fees associated with finalizing the transaction. These may include loan origination fees, appraisal fees, title insurance, escrow fees, and prepaid expenses like property taxes and insurance.
Your closing statement will provide a detailed breakdown of these costs, allowing you to review and understand the financial aspects of the transaction.
It is very important that you understand how much cash at closing you will need to close in addition to your downpayment. It is typically several thousand dollars and will depend greatly on the purchase price of the property. Your lending fee will be 1% to 2% of the purchase price and the escrow fees can be a couple thousand dollars as well. Your agent should prepare you from the beginning when you start looking for homes to ensure you will be able to close at the end.
Keys, Funding, and Recording
Contrary to popular belief, keys are not typically handed out at the closing table. Instead, they are retrieved from the listing agent and brought to title or delivered to you by your agent once the transaction has "funded and recorded."
Funding refers to the transfer of funds from the lender to the escrow account, while recording refers to the official filing of the deed and mortgage with the appropriate county office.
Closing escrow is the final step in your home buying journey, and it's essential to have a clear understanding of the process. As experienced real estate agents, we are here to ensure a smooth and successful closing. If you have any questions or concerns, don't hesitate to reach out. Congratulations on reaching this milestone!