What Happens at a Residential Purchase
Mortgage Closing?
If you're a first-time homebuyer or just someone that hasn't financed a home in a while, you might wonder ...
It's a timely and relevant question, as current Mortgage Closings bear little physical resemblance to pre-pandemic Closings.
As always, it must be remembered that Closing processes are subject to local standards, but typically on a purchase transaction, today's residential Mortgage Closing is physically attended by the:
- Home Buyers
- Title Company Representative
- Buyer's Attorney (if one is involved)
The Sellers typically pre-sign their documentation prior to the actual Closing. At this time, because of the pandemic, Chicagoland title companies are limiting the number of attendees at Closings and are asking or insisting that Realtors and Loan Officers do not attend.
Because of that, many of my home buyers then want to know "who handles the document signing and the explanation of forms?" Truth is, it depends on the case and the parties involved.
What follows below is the most common or "typical" Closing scenario from a Lender's perspective:
- After Final Loan Approval is received, the Mortgage gets scheduled to Close at the Title Company (in MOST Cases), OR at a hosting Mortgage Lender or Real Estate Attorney's office.
- Lender and Seller then provide their closing figures specific to their client's transaction to the title company hosting the Closing process.
- Figures are shared with the Buyers as to how much to bring in Cashier's Check form or bank wire to the closing
- Closing documents and disclosures are prepared by the Lender's Closing Department
- Legal documents such as the Deed get prepared by the attorneys or the title company (in most states)
- Borrowers are asked to review, sign, and date the Closing papers. (Borrowers will note that there's a similarity between the documents they sign at Application and Mortgage Closing)
- The Note is signed by the Borrower(s) at Closing. It is their promise to repay the loan and states the Mortgage interest rate, terms, and payment for Principal and Interest
- The Mortgage document is also signed by the Borrower. It allows the Lender the ability to record a lien again the property and lays out the rights of the Lender and Borrower, should a Borrower default.
- Loan Estimate
- Closing Disclosure
- The working of the Escrow Account
- Payment Notices
- PMI (Private Mortgage Insurance), if applicable
- Other miscellaneous authorizations
The Title Company hosting the transaction then collects all the signed documents:
- The documents are scanned (securely) to the Mortgage Lender's Closing Department
- The documents are reviewed by the Lender's Closing Department. If found satisfactory, the loan "funds" and the Closing is completed
- The Title Company distributes the various funds involved to those acting as "Agents" to the transaction
- The property keys, plus any seller-to-buyer documents are handed over
- The Title Company and Mortgage Lender's Closing Department finalize the remaining steps that formalize the process and close out the transaction
- The Borrowers are provided with electronic or paper copies of what they signed
- Borrowers are provided specific instructions as to how to make their first mortgage payment
The Closing Process can vary by state, county, and municipality. The individuals involved can also add their own flavor to the process. Even the type of transaction (including the mortgage program utilized by the Borrower) can change the process a little.
But while the pandemic has changed many physical elements of the Closing process it has definitely not removed the personal from it. Each of my transactions remains extremely personal in nature and meaning to those taking part in it ... and that includes me.
That will never change.
Contact me! I'll put my 40 years of Mortgage experience and expertise hard to work on your behalf.
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