You’ve found your dream home, you’ve put in the offer, it’s been accepted and now it’s time to close the deal… But what exactly does closing a mortgage mean and what are your options to do so?
What does it mean to close a mortgage?
Closing a mortgage is the last step in financing your loan and buying a house. It involves the homeowner and all other parties that are part of the process of collecting the mortgage. It also includes signing all the necessary documents that are required to activate the mortgage. Once the homeowner signs the documents, he then becomes responsible for the loan (AKA your mortgage). When buying a home with the aid of a mortgage, the process of closing the loan and closing the home purchase happen simultaneously. Immediately after closing the loan, you are then required legally to start repaying the mortgage in the installments outlined in your amortization schedule.
What does closing a mortgage entail?
Closing a mortgage often requires the help of a real estate lawyer but you can also close the mortgage using what’s called a closing service. Whichever option you take, this process involves signing all the final documents that are required to commence ownership of the home. The help of a real estate lawyer or closing service is required to navigate tricky terrain when closing a mortgage as closing a mortgage also entails making sure that all of the details are correct in terms of the title of your insurance company, an escrow company, the title of the home, details of any liens on the home , details of your lender, your attorney (often represented by your real estate lawyer or closing agent), and the seller’s attorney. To finalize the deal, all parties must sign all the documents face to face or via email and you’ll have two options as to who completes this task for you.
1. You can use a real estate lawyer
A real estate lawyer practices law of real estate specifically. This means that they are experts in your local area and can be very efficient in making sure all of the details in your mortgage are correct, and that nothing is being left out of the deal that you might regret later. However because they are your local experts, and lawyers, you tend to pay a little more to have your specific lawyer of choice represent you in closing your mortgage. To sign off on the documents to close the mortgage, you would arrange a time to meet your real estate lawyer at their office. He or she would review all the details of the mortgage with you, highlighting anything he or she thinks might be of concern, and then if everything is well put together and represented as it should be, you sign the final documents and the deal is done. Once everything is finalized your real estate lawyer would collect the keys for you and you would pick them up from his or her office when they are ready for you.
2. You can use a closing service
A closing service does the same job that your real estate lawyer would do in order to close the mortgage but with the convenience of your closing agent coming to you. Your closing agent is the one who would be the person you would meet with to sign off on the final documents, and they would arrange to meet you whenever and wherever is convenient for you. Making the use of a closing agent quite popular with those that work the usual hours that a lawyer does, so that they don’t have to take time off work in order to complete the deal. Your closing agent still has all of the paperwork reviewed legally in terms of making sure everything is truthfully represented and without error – They’re just a mobile version, to make the process of closing the mortgage easier to complete for those with complicated schedules or for those who like to have the additional value of fitting the time for signing all the paperwork in around their personal schedule.
Why use a closing service or real estate lawyer?
When closing a mortgage, there are a lot of things that often get taken for granted. It is, therefore, crucial to have everything professionally reviewed to prevent any form of negative outcomes. A few companies allow you to sign documents electronically, but most companies require a physical signature. There are also a lot of relevant documents that are necessary for closing a mortgage and each of these documents has substantial financial implications on the homeowner, so it is important that you make use of a closing service of sorts even if you’re not using a realtor and have decided to buy your home privately. The documents often include federally mandated documents such as your driver’s license, purchase contract, land title, down payment confirmation, income confirmation, lawyer contact information and credit report.
What are the steps involved in closing a mortgage?
- Receiving the necessary documents such as the closing disclosure, promissory note and the deed to the property.
- Transferring funds, which may be handled by your closing agent or lawyer. Ensuring that all payments are accordance with necessary laws and regulations.
- Showing proof of taxes and insurance.
- Transfer of Ownership, which is carried out immediately after all documents are signed, funds transferred and the closing process is finalized.
Whether you decide to use a real estate lawyer or a closing service, be sure that all the details are reviewed in order not to be at a disadvantage. There are a lot of documents involved in the process, and as you’re personally on the hook for every payment and detail laid out in the contract, make sure to ask all of your questions and have your advisor talk you through every detail.