Closing: The Big Day!

In most areas, the closing is a formal meeting typically attended by the buyer, the seller, the real estate sales professional, and representatives of the lender and the title company. In some areas a formal closing is not held. Instead, an escrow agent processes all the paperwork and collects and disburses the required funds. You may choose to hire a real estate attorney, although in many cases this is not necessary or required. Check with your real estate agent or lender to see if your state’s laws require that an attorney be present at the closing. The attorney’s role is to attend the closing, give advice about the signing of documents, and represent the buyer’s interests. Your role at the closing will be to sign many documents, pay your closing costs, and collect the keys to your new house!

You may invite anyone you wish to accompany you to the closing. If you have a guardian, that person will need to be present. If you need assistance to read documents, help to communicate clearly, or help with any other tasks that may be required at the closing, you need to arrange to have this assistance available.

The most time-consuming part of the closing process is the explanation and signing of numerous documents. Following is a description of the major documents to be signed at closing.

Truth-in-lending Act (TILA) statement. This document is required by federal law. It obligates mortgage lenders to explain in writing the terms and conditions of a mortgage. The lender must give a copy to a loan applicant within three business days of receiving the initial application.

The TILA statement lists the annual percentage rate (APR). The APR is the actual interest rate you pay on a yearly basis. An APR includes other costs of financing such as any fees paid by the borrower. This rate may be higher than the interest rate stated in your mortgage because the APR includes any points, fees, and other costs of credit. The TILA statement also sets forth the other terms of the loan, including the finance charge (the total amount of interest you will pay over the life of your loan), the amount financed, and the total payments required.

If the actual APR varies from the original estimate, the lender must give you a corrected TILA statement by the day of closing. If other items on the TILA statement have changed, but the APR is the same, the lender is not required to give you a new TILA statement. You need to check with the lender shortly before closing to see if the TILA statement is still accurate.

The note. The mortgage note is basically an IOU. It represents your promise to pay back the money you borrowed from the lender at a stated interest rate. The note spells out the terms of the loan, including the date your payments must be made and the location to send or present the payment.

The note describes any penalties that will be assessed if you are late in paying the loan. If you fail to make the required payments, if you sell the house without written consent from the lender, or if you violate the terms of your note or mortgage, you may be required to pay back the full amount of the loan before the end of the term.

The deed. A deed is a legal document that transfers and verifies ownership of a property. The seller must bring the deed to the closing, properly signed and notarized (made authentic by a person called a notary public).

The mortgage. The mortgage is a legal document that pledges a property to the lender as security for payment of a loan. Although you have possession of the property, the lender has a security interest in the property until the loan is fully repaid.

The mortgage restates the basic information contained in the note, as well as the date of the final scheduled payment. It also states the responsibilities of the borrower to pay principal and interest, taxes, and insurance in a timely manner; to maintain continuous hazard insurance on the property; and to properly maintain the property and not allow it to deteriorate.

The mortgage also states that if the borrower fails to meet these and any other requirements in the mortgage, the lender can demand full payment of the loan balance. In addition, if the borrower does not pay, the lender can foreclose on the property, sell it, and use the funds to pay off the loan, interest, and the legal costs of taking back the property. The borrower will receive any funds that remain after all of these expenses are paid off.

There may be a "deed of trust" used instead of a mortgage to secure the lender’s interest in the property. With a deed of trust, a third party is involved in the sale. This person, called a trustee, holds the bare legal title to the property until the entire loan is paid and the borrower holds the equitable title to the property.

Affidavits. An affidavit is a written promise that you are telling the truth. At the closing, you may be asked to sign affidavits. One example of an affidavit that you may be required to sign would be a promise that you plan to live in the house. Affidavits may be required by state law or by the lender. If you provide false information, you may face criminal penalties, and you may run the risk of having the lender accelerate your loan (demand full repayment before the end of the term).

Probate documents. Be sure to bring all probate documents that are relevant to the purchase of your home. If a ruling was made by a judge, bring the documentation with you.

Escrow accounts for repairs and PITI. Have all of the information regarding your various escrow accounts with you at the closing, including their location and who will be responsible to maintain them.

After all the papers have been signed and the fees have been paid, the mortgage (or "deed of trust"), and the deed must be officially recorded. They are generally recorded at the registry of deeds or the town recording office. This legal transfer of the property usually takes one to two days after closing and confirms the buyer as the official owner. The deed of trust is typically returned to the borrower after it has been recorded.

Be sure that the documents you sign at the closing are stored in a safe place. You may want to consider purchasing either a small, fire-proof safe for your home or a bank deposit box.

House keys are the one item that sellers most commonly forget to bring to settlement. You will want to make sure you receive the keys for all the doors (basement, garage, etc.) in your new home.

The following list of questions should help you to finalize your preparations for the closing:

• Do I have the funds needed for closing day?
• Have all of the conditions of the loan offer been met?
• Have I reviewed the HUD-1 Settlement Statement?
• Have I obtained all of the documentation I will need at the closing?
• Have all repairs been taken care of?
• Have I secured all the appropriate insurance policies?
• Are my escrow accounts set up?
• Have I arranged for assistance at the closing?

Local newspapers and other media may want to feature your successful home purchase as a news story. Because such a small number of individuals with disabilities have purchased their own homes, people are interested in learning more about how homeownership is possible. The media may provide a means of helping to share information with potential home buyers, families, neighbors, lenders, and real estate sales professionals. If you are approached by the media, you may decide whether to grant an interview. You have the right not to speak with them. Being interviewed by reporters may be stressful. You will want to ask your team for assistance in preparing your comments in advance of the interview.

Again, review your action plan. Be sure that all of the tasks on the list have been completed. Develop a new action plan. Take into consideration any new opportunities or obstacles. Ask your planning team members if there is anyone else who should be involved.