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 Closing the loan
The closing (or settlement) is the meeting at which you sign the paperwork and pay all expenses to obtain your new loan. Planning to get some cash out of your home as well? Put the champagne in the refrigerator, but anticipate a short wait. Getting the cash takes just a few more days.
The closing process varies from place to place, but many activities are standard. You'll sign documents and pay various closing costs. If you're wondering how to make your payments after the loan closes, see Choose your payment method.
How much will your closing costs be?
What happens at closing
Closing documents you receive
How much will your closing costs be?
Prior to the closing meeting, your title company, escrow company or attorney will review with you a copy of the HUD-1 Settlement Statement. This document will provide the final total for your closing costs. It establishes the total funds you must bring to closing. You'll need to obtain a certified or cashier's check for this amount. Personal checks usually aren't accepted.
Did you want to avoid closing costs? See Handling closing costs.
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What happens at closing
The meeting usually takes about a half hour and is usually held at the closing agent's office or your local Countrywide office (in some states). You may live in an area where there is no formal closing meeting. In that case, either an escrow or closing agent, or an attorney, processes all the paperwork, arranges for all documents to be signed, and collects and disburses the required funds.
The steps below explain what happens during and after closing:
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Closing agent reviews settlement sheet with you and you sign it. |
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Signatures are collected for loan documents, such as the mortgage or deed, note and Truth-in-Lending statement. |
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If the papers are in order, you submit a certified or cashier's check to pay closing costs (if applicable). |
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Lender provides a check covering the home loan amount to the closing agent. |
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If your monthly payments are to include property taxes and insurance, a new escrow account (or reserve) is established. (Current Countrywide customers can have their existing escrow account rolled over to the new loan.) |
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If applicable, the right of rescission period starts. You have 3 business days (including Saturday) to decide whether to go forward with the transaction. The rescission period expires at midnight of the third business day following the date you received your notice of right to cancel, the date you signed loan documents or the date you received your Truth in Lending disclosures (whichever occurs last).
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Unless you decide to rescind or cancel the transaction, the loan will be funded after the rescission period expires. The closing agent handles the disbursement of your loan funds. |
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A few of the key closing documents you receive
HUD-1 Settlement Sheet Itemizes the services provided and the charges. You should be allowed to review this form shortly before your closing meeting so you know your closing costs in advance.
Truth-in-Lending (TIL) Disclosure Your initial TIL disclosure will be mailed within 3 business days after applying for a home loan. It outlines the costs of your loan and discloses the APR and other terms of the loan, including the finance charge, the amount financed, the payment amount, and the total payments required. Since it's possible that the annual percentage rate (APR) calculated at your loan application will change a little before closing, your lender is required to give you the final version of your TIL disclosure at or prior to the closing meeting.
Deed of Trust or Mortgage (also Security Instrument) Documents conveying a lien in your property as security for repayment of your home loan. (If you default on your loan, your lender has the right to foreclose your ownership interest and take possession of the property.)
The Note The mortgage (or promissory) note is a legal "IOU." The note represents your promise to pay the lender according to the agreed terms, including the dates on which your home loan payments must be made and the location to which payment must be sent.
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Equal Housing Lenders. © 2008 Countrywide Bank, FSB, Countrywide Home Loans Division. Member FDIC. Trade/service marks are the property of Countrywide Financial Corporation, Countrywide Bank, FSB, or their respective affiliates and/or its subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved.