At The Closing

The final step in transferring ownership of your new home is called the closing

You’ve got all your worldly goods packed into a truck. Your life has been chaos for weeks. You may be homeless if, like many homebuyers, you’ve just sold your house or terminated your lease. So why do you need to spend an hour or so in a room?

The real estate closing, in Florida at least, is an all-encompassing event for buyer and seller, and their agents. It is usually held in the office of the title company (selected by the seller in Palm Beach County) and conducted by the title company’s closer. The responsibility of the closing agent is generally to receive and disburse all the funds, account for the transaction, and ensure that title is transferred free of liens in accordance with the contract. When you walk out, you own the home, and are ready to move in and relax and enjoy it.

The Mortgage Documents

Although you may have already read and signed a lot of paperwork, the lender’s closing package will usually include the most up to date versions of these documents, and additional documents for you to sign:

  • Your standardized loan application, amended by the lender based on supporting documents.
  • Mortgage commitment, with rate, principal amount, and terms summarized. You may also receive a payment schedule and your first payment coupons.
  • A standardized Truth-In-Lending notice advising you of the note rate, total obligation, payments, options for prepayment, and (often confusing to borrowers) a calculated Annual Percentage Rate meant to allow you to compare loans. Sort of late at this stage, but you should have received a TIL within 3 days of your original application, and this typically updates all the numbers.
  • The Note, which you sign as a promise to repay the loan and to acknowledge the amount and terms of the loan. If your loan has a prepayment penalty or other special clause, it should be part of this document or attached.
  • The Mortgage, which pledges your new home as collateral. In this document you promise to keep the home insured, maintained, and not to do anything to reduce its value. This document serves as a lien on the home and allows the lender to take the home from you if they are not repaid.

The mortgage lender will have already wired funds to the closing agent for your loan, and once the paperwork has been approved the funds will be released and closing can conclude.

Closing Paperwork

Once you’ve dealt with the mortgage papers, you’ll go through the remaining items to transfer title.

  • Owner’s Title Commitment commits the title insurer to issue a policy protecting your interest in case of issues in the future regarding the title. It may have exclusions, and you should have had the opportunity to review these beforehand.
  • The Closing Statement (known as a HUD-1) accounts for the costs and disbursement of funds. You should have been given a preliminary statement before you went to the bank for your money; this one is the final version, and the agent will usually go through every item with you.
  • The Deed, which when signed by the sellers and recorded, transfers ownership of the property to you. In Florida, you own your property. In some western states, the bank holds title.

You’re Done

Finally, once you’ve signed everything, the check is turned over to the closing agent. The seller signs the deed, you get the keys, they get their check, and you’re the proud owner of your new home!