Closing (or 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. If you live in an area of the country where there is no formal closing meeting, an escrow agent processes the paperwork, arranges for the documents to be signed, and collects and disburses the required funds.

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. 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. The types of services provided will depend on the closing agent you choose and where you live because closings are conducted differently across the country. Some are conducted by insurance companies or escrow companies; others are held by real estate brokers, lending institutions, or attorneys for both the buyer and the seller.

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

An estimated closing date is usually specified in your sales contract, and a final date will be chosen after your mortgage loan application is approved and you've signed the commitment letter. Typically, your real estate agentl, 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). Ask your closing agent for a statement that lists the date, place, and time of the closing meeting and the items you will need to bring.

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 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. If you consistently fail to make timely mortgage payments, you could lose your home and the good credit you've worked to maintain. Contact your lender at the first sign of trouble. You can potentially increase the value of your home by keeping up with repairs, and maintaining and enhancing the condition and appearance of your home.

Your agent can help you with many of these items:

• Are all the necessary inspections complete?
• Are all the required repairs complete?
• When will you conduct your final walk-through inspection?
• Is your attorney satisfied that title to the property is clear (no one else has a claim on it)?
• Have you confirmed a date, time, and place for your closing?
• Who will conduct the closing?
• Is your insurance policy paid and ready to go into effect the day you close? You'll need a receipt for proof.
• What form of check should you use (and who should it be made out to) to pay for the closing costs?
• Has your closing agent told you the closing amount?
• Do you have receipts for the items you have already paid for, including your deposit and inspection fees?
• Bring your checkbook to cover any last minute extras that might have been overlooked.

In most cases, you'll be given the opportunity to inspect the home immediately prior to closing. At this time, it's important to check on any work the seller agreed to have done in response to your initial inspection. You should also carefully check the condition of walls and ceilings from which window treatments, pictures, or any other attached furnishings have been removed. If you find any problems, don't hesitate to bring them up at the closing. It's the seller's responsibility to correct them.

1. The lender's representative will ask for your paid home insurance policy.
2. The agent will list the adjustments. These include the money you owe the seller (the remainder of the down payment, prepaid taxes) and what the seller owes you (unpaid taxes, prepaid rent).
3. You will sign the mortgage. This gives the lender legal rights to the property if you don't make your payments.
4. You will sign the mortgage note which is the promise to repay the loan in regular monthly payments.
5. You will get title from the seller in the form of a signed deed.
6. The lender's representative will collect the closing costs from you and give you a settlement statement of all the items for which you have paid.
7. The deed and mortgage will be recorded in the town or county Registry of Deeds.
If you have additional questions about the closing process, talk with your agent or contact NRT Mid-Atlantic Title Services LLC.

The first thing you'll want to do is have the locks changed. Also, put your deed and other important paperwork from the closing in a secure place, preferably a safe deposit box. Even though it's all on file with the county, it's smart to know where your copies are and have access to them at all times.