Closing on a new home can be an exciting experience. But it can also be a surprise if you don’t know what to expect and aren’t prepared. Understanding the closing and associated costs will help you be prepared. Upon receiving your commitment letter from McCue Mortgage, you want to set a closing date. There are also some things you will need to have completed before the closing.
Set a Date: Upon receiving your approval letter from McCue Mortgage, you will need to set a closing date that works for you and the seller. The timing of your closing may be driven by your living situation, work schedule and moving plans.
Contact your Attorney: If you choose to have an attorney represent you at closing, contact the attorney to expedite the closing of your loan. Your attorney will conduct a title search and secure title insurance to protect your ownership and legal right to purchase the property. The title search establishes that the seller in fact owns the property and has the saleable interest in the property; determines any restrictions that pertain to the use of the land; and if there are any liens on the property that need to be paid prior to closing to effective transfer ownership of the property. Title insurance protects a lenders and an owner’s financial interest in a property against losses due to title defects or other problems.
Homeowners and Flood Insurance: Mortgage lenders require that you place homeowner’s or hazard insurance on the property to protect you and the home in the event the property is damaged by fire, storm or some other event. If your property is in a Federal Emergency Management Agency (FEMA) defined flood zone, you will be required to purchase flood insurance to protect your home against flood damage.
Closing costs are any costs associated with the purchase of a new home and can be paid by you or the seller. McCue Mortgage will take the time to review these expenses with you and answer any questions that you may have during this process. While these costs vary by lender, most fall into two categories, origination and settlement charges.
Origination Charges are charges by the lender for the evaluation and closing of your mortgage loan application. These charges may be flat fees associated with the cost of processing your application or may be charges as mortgage “points”. One point is an amount equal to one percent of the principal amount of a mortgage. Many times points are charges associated with the interest rate offered and the risk associated with your loan. Sometimes, the origination charge may be a combination of both a flat fee and points.
Settlement Charges are the costs for the settlement of the transaction and transfer of the property at your closing. Many of these costs are third party costs including, but not limited to, the cost of your appraisal, credit report, upfront mortgage insurance, attorney representation charges, title insurance, government recording fess, real estate taxes and homeowner’s insurance.
All of the costs associated with your mortgage financing and real estate transaction are summarized at closing on the government form known as the HUD-1 Settlement Statement, which is prepared by the attorney for the closing. The HUD-1 summarizes the seller and buyer costs associated with the transaction, including adjustments for items the seller may have prepaid, like a new supply of oil in the home oil tank, that are not associated with your mortgage financing.
The closing is the final step in your homebuying experience. It’s a formal meeting with you and representatives from the lender, seller, listing and selling agent, along with attorneys representing you and the other parties. At the closing, you will sign numerous documents and affidavits which include:
- The Note
- The Mortgage Deed
- A Truth-In-Lending Statement
- HUD-1 Settlement Statement
These documents contain important summaries of the terms and conditions of your loan. It’s important to ask questions if you don’t understand the information before you sign ANY and ALL documents. If you were required to bring money to the closing, you will be given the final figure by your attorney prior to closing day for your check amount. This check will need to be a bank certified check made payable to your attorney; sorry no cash or credit cards. Depending on the time of year, taxes due will be paid by your attorney.
After all of the documents have been signed and the fees have been paid, the mortgage deed and the note need to be officially recorded at the town clerk’s office. Don’t worry, your attorney will take care of this step for you.
You did it! Now…
IT’S TIME to walk with your keys to your new home!