Closing on Your Mortgage Loan

by Francine L. Huff
Old House Web Columnist

Waiting to close on a mortgage loan can feel like a tedious process that is designed to escalate your stress level. But if you understand exactly what will happen on the big day, you'll be more likely to experience a smooth closing with no surprises.

What is a Mortgage Loan Closing?

The closing is the point at which your mortgage loan will actually be funded and your legal obligation to repay it kicks in. You'll be required to bring in your down payment (less whatever deposit or earnest money you have already paid), closing costs, and any prepaid taxes, insurance, or finance charges.

A Final Review

At the closing you may see several other people, including the seller, your mortgage loan officer, real estate agents, a closing or escrow agent, and attorneys. Generally, an escrow company, attorney, or title company will serve as the closing agent. Before the big day, the closing agent will be responsible for a title search, which checks for any liens or lawsuits involving the property, and title insurance, which protects against any problems that could occur after you buy the property. You'll be required to pay for title insurance for the lender, and have the option of buying an owner's policy to protect yourself. The closing agent is also responsible for the property survey.

Sign the Mortgage Loan Documents

You and the seller will receive copies of the HUD-1 Settlement Statement and have a final review of all of the costs associated with your real estate purchase before being asked to sign it. You'll also sign the mortgage loan documents, which include a promissory note, the mortgage, and a Truth-in-Lending Statement.

Once all paperwork has been reviewed, you'll be asked to pay the balance of any money due with a certified check or wired funds. The closing agent will also receive the check from your lender for the mortgage. After the closing, the deed will be recorded and an escrow account will be set up by your lender to pay your property taxes and homeowner's insurance.

In the weeks leading up to your closing make sure you ask your real estate agent and attorney to explain anything about your home purchase that you don't understand. Visit the property to inspect it before you go to the closing to make sure everything is in order.

About the Author

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.