Home-Buying Process:
The Closing
Preparation for Closing
When preparing to close your loan, it is important to know the exact time, date, location and amount needed for closing on your home. Most financial institutions require that you bring this amount in certified funds.
Some mortgage companies may close your loan at a title company while others may close at one of their local office locations. Regardless of where you close you should get a copy of your loan documents at least 48 hours BEFORE you close. This will give you time to review all the fees, costs and terms associated with the loan. Also, try to schedule a final walk through 24 hours before you close.
If your loan documents are not ready, at minimum get a copy of the settlement statement, also known as the HUD-1. This document gives the borrower an itemized statement of services provided and the fees charged to the buyer and/or seller. Like a receipt when you go grocery shopping, this is your receipt for your house purchase.
CAUTION: Some dishonest lenders will not give you a copy of your settlement statement until you are at the closing table. They will then try to pressure you to sign quickly so you will not question any extra fees that may have been added to the loan. This can happen especially if the loan will be closed in-house where you do not have a third-party, neutral organization, such as a title company, at the closing. Instead you have the financial institution that has a vested interest in your loan explaining the loan terms. Not disclosing the loan terms properly can be dangerous for the consumer and increase the costs by thousands of dollars.
The estimated dollar amounts on the Good Faith Estimate and the actual numbers that show up on the settlement statement should be very similar. The individual fees should not vary more than 10 percent from what was quoted originally. Typically, you will notice a difference in fees on your homeowners insurance or property taxes. The difference is the result of your loan officer?s estimation of what these fees will be. It is not until the consumer actually purchases the homeowners insurance that these fees are set. CAUTION: Be sure there are no new fees added to the loan. If there are, ask your loan officer what these fees are for and why they were not included in the original Good Faith Estimate.
If the settlement statement is not available 48 hours before closing, one option is to contact your loan officer. Ask him or her if you can meet at least 24 hours before the closing to go over all the fees associated with the loan. Remember, if you do not feel comfortable with the fees or if you feel that your questions are not being answered to your satisfaction, do not hesitate to back away from the transaction.
A second option is to contact the title company. The title company should be able to provide a copy of your loan documents. If they have not received the specific terms and conditions of your loan, they can contact your lender. Once they get the specific loan terms and conditions, a copy can be made for you.
A third option would be to contact your real estate professional. Although the real estate professional may not be able to help with the specific loan terms, he or she can help you make sure all the fees charged to you match what was agreed upon in the contract between you and the seller. The professional also will schedule the final walk through on the house you are about to purchase. The final walk through may be slightly different depending on whether you are buying a new or pre-owned house.
HUD 1/Settlement Statement Sample
Back to top
