It's time to "close."
You have just about reached your goal. After you "close," you'll be the proud owner of your new home. It's important to understand a few things before the closing. Once you receive your commitment letter from Norcom, you'll want to set a date for the closing. You'll also want to review all the closing costs so you'll be prepared and your closing will go smoothly – no surprises! We can help you review what you'll need to bring "to the table" to successfully close and assume ownership of your new home.
There are a couple of other things to keep in mind…
If you wish to have your own legal representation at the closing, you'll need to contact your attorney. Your lawyer can help expedite the closing. He or she will also conduct a title search, to ensure that the seller does, in fact, have the right to sell you the property. A title search will uncover any potential restrictions on the use of the land and/or any liens on the property that need to be paid before you can legally purchase it. Your attorney will also secure title insurance, which protects both you and Norcom against losses that may arise from title defects or if any other problems occur.
You will also have to secure Homeowner's Insurance prior to closing. If the home you are buying is in a Federal Emergency Management Agency (FEMA) flood zone, you will need to get flood insurance to protect both you and your mortgage lender from losses due to potential flood damage.
What are home closing costs?
Closing costs are any fees or costs associated with the purchase or refinance of a new home. These costs are most often the buyer's responsibility, but if you so negotiate, they can become the responsibility of the seller. Your Norcom home mortgage expert will go over the closing costs in detail, so you fully understand what they are. Generally, closing costs fall into two categories: origination and settlement charges.
Origination charges are costs due to Norcom for the evaluation and closing of your mortgage application. They can include any fees associated with processing your mortgage application, as well as any mortgage points you have agreed to pay. (A mortgage "point" is simply 1% of the principal you wish to borrow. Some borrowers choose to pay points to qualify for a lower interest rate. In other cases, a point may be required to offset the risk that may be associated with your mortgage. In many cases, no points are due from the borrower.) Click here to calculate the real APR of a loan with points.
Settlement charges are the costs for the settlement of the sale and the transfer of the property into your name at the closing. These costs can include the property appraisal, a credit report, mortgage insurance, attorney's fees, title insurance, recording fees, any real estate taxes owed, and your homeowner's insurance. At the closing, you will receive a summary of all the costs required for your financing and real estate transaction in a government form called the HUD-1 Settlement Statement. This document summarizes both the seller's and the buyers costs for the transaction including any adjustments that have been made for items that were paid for prior to the closing and are not associated with your mortgage financing.
What happens at a home closing?
The closing is simply a meeting between you and representatives from the lender, seller, listing and selling real estate agents, as well as attorneys to represent you and the other parties. There will be a number of documents that require your signature. These include…
- The Note
- The Mortgage Deed
- A Truth-in-Lending Statement
- The HUD-1 Settlement Statement
All of these documents contain important information and summaries of the terms and conditions of your mortgage. By all means, you should feel free to ask questions if there is any language you don't understand, and do not sign anything without full comprehension of the document. If you need to bring money to the closing, your attorney will tell you the exact amount in advance, so you can bring a bank certified check (made payable to your attorney). Cash or credit cards are not acceptable. Once all of the documents have been signed, and all of the costs have been paid, the mortgage deed and the note will be officially recorded at the town clerk's office in the town where the property is located. Your attorney will handle this for you. Congratulations! You're now the proud owner of a new home.