9. Settlement

Once you have your mortgage financing in place you'll proceed to the closing (or "settlement"). Your primary role at the closing is to review and sign documents related to the mortgage loan and to pay the closing costs. Each situation is different, so the closing costs may be part of your mortgage. Or the seller or the builder of the home may pay some or all of the closing costs. Many of the people involved with the purchase of your home may be at the closing -- such as the seller and their real estate agent, and a closing agent who manages the paperwork and disburses funds. The meeting is usually held at the closing agent's office.

Several important steps need to be taken in the final weeks before the closing, including having a title search conducted, getting title insurance, and getting a survey of the property done (if necessary). These activities will be coordinated with the help of your agent. Additionally, you must arrange for a termite inspection (if required) and go on a final walk-through inspection before the closing meeting. You should select a closing (or settlement) agent to coordinate closing-related activities such as preparing and recording the closing documents and disbursing funds.

Closing Costs

One way to review the costs associated with your closing is to define them as seller versus buyer costs, mortgage-related closing costs, and government-imposed closing costs. Make sure that any agreement regarding "seller versus buyer costs" is specified in the sales contract. Mortgage-related closing costs can vary, but the following are paid at or by closing:

• loan origination fee
• loan discount points
• appraisal fee
• credit report fee
• assumption fee (if the buyer is assuming an existing loan)
• prepaid interest

Closing Date

The closing date is specified in your sales contract. Typically, your real estate agent, your approved lender, and closing agent coordinate the setting of this date. Make sure the closing occurs before the commitment letter expires and while your interest rate lock-in remains valid (if applicable).

At Closing

At or after the closing, you should receive the original or copies of the following:

• HUD-1 Settlement Statement -- This document itemizes the funds the buyer and the seller will pay at closing.
  * Note -- Often called the promissory note, it represents your promise to pay the lender according to the agreed upon terms of the loan, including when and where to send your payment.
• Affidavits -- A written declaration made under oath before an authorized official, you'll sign various affidavits at your closing verifying information such as your address, place of employment, checking account number, and more.
• Deed -- This document transfers ownership from the seller to you. After your closing is completed, keep any paperwork you received in a safe place.

Remember to keep a copy of every document you signed. When you file your taxes, it may be useful to have a copy of the settlement form because it lists the real estate taxes and loan discount points you paid at the closing -- they may be tax deductible. Also make sure you keep all homeowner's insurance and title insurance records. You may need to access them if you discover a flaw in the title after you've purchased your home.
After Your Closing

After the closing, you own your home. So, you may begin wondering what you can do to protect your investment -- and perhaps even help it increase in value. Homeownership brings both rewards and responsibilities. It's important to keep both your home and your finances in good shape. That means managing your money wisely to ensure you can meet your obligation to repay the mortgage loan. This will enable you to make your home's equity work for you. Staying current on your mortgage payments will ensure that you keep your home. Making late payments usually results in late charges, which could reflect poorly on your credit report and could impair your credit rating. Good credit is important for many reasons, especially if you want to apply for a second mortgage to make home improvements, apply for a home equity loan, or refinance.

There's so much to remember before I close. What do I have to do?

Your agent can help you with many of these items: