Purchasing a home is a big commitment. On top of the responsibilities you’re taking on as a homebuyer, the mortgage lender is also making a commitment and taking a risk ― hoping that you will repay the loan on time. As a result, the mortgage loan closing process is an important part of the homebuying experience and requires a lot of paperwork.
Here is a checklist of what you will need to complete mortgage loan closing:
□ Funds
Make sure that all the money needed for your down payment and closing costs is ready to go so you don’t have any financing problems at mortgage loan closing.
□ Escrow Account
The lender may require you to set up an escrow account to ensure future mortgage payments, as well as payments for insurance and property taxes.
□ Home Inspection
Make sure a professional home inspection has been performed on the property. If there are any issues with the home, you may be able to negotiate the cost of repairs with the seller.
□ Property Survey
A property survey will be required in order to transfer the deed from the seller to you. All documents relating to the survey of the property should be presented at mortgage loan closing.
□ Assessor’s Statement
The property will also be assessed by a property appraiser. It’s important to know the home’s market value, as it can affect your home equity.
□ Homeowners Insurance
You will need to have a homeowners insurance policy lined-up, which is required to buy a house, prior to mortgage loan closing.
□ Title Search
You want to make sure that the property’s title is clean so it can be transferred to you at mortgage loan closing.
□ HUD Forms
HUD forms, such as the HUD-1 Settlement Statement, are issued by the U.S. Department of Housing and Urban Development. Be sure that the appropriate HUD forms are included in your mortgage loan closing documents.
□ GFE and Truth-in-Lending Statement
Make sure that everything is in order with your Good Faith Estimate (GFE) and Truth-in-Lending Statement, which disclose the mortgage loan closing costs and loan terms.
□ Promissory Note
The promissory note (a.k.a. mortgage note) is the written promise indicating that you will repay the loan/debt, plus interest, according to the agreed terms.
□ Mortgage Assumption Statement
If you are taking over the seller’s existing mortgage, a Mortgage Assumption Agreement is required to acknowledge that you will assume responsibility for the property.
□ Other Certifications
Other documentation (such as pest inspection or flood zone certification) must also be included at mortgage loan closing.
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By going through this checklist and having the proper documents/funds lined up, you can help the mortgage loan process to go more smoothly. If possible, try to avoid closing your loan during the last few days of the month because that’s when paperwork usually gets backed-up (at government offices, title companies, etc.). The more prepared you are, the better off you will be on mortgage loan closing day.