The loan closing is the culmination of a lot of work of dozens of people involved in your loan process. It’s an exciting time in which the property ownership transfers from the seller to you. By this time, all the hard work is done and now you’re ready to sign the loan closing documents!

Buying a Home in Minnesota Step 7: The Loan Closing

At some point after loan application your real estate agent will coordinate a closing date and time that is on or before the date specified on your purchase contract. The closing involves several people who will all gather together at a title company to transfer the property ownership.

The title company will have a representative known as a closing agent whose job is to collect all of the paperwork from the lender, the agents, and the sellers. The closing agent will review and have you sign all of the pertinent details of the paperwork, which mostly includes the mortgage financing package.

On closing day you will find these people at the closing table:

The closing agent

You

Your real estate agent

Me

The sellers

The listing real estate agent

You should prepare for about a one hour appointment to close the transaction. During this time you’ll be reviewing the final mortgage package of documentation which is quite extensive. While the closing agent will describe each of the documents that you need to sign, it’s good to know in advance some of the documents you will be signing as described below.

Final Loan Application

You will sign a loan application that will contain the financial information you provided during the actual loan application. It will contain any updates that we made along the way. By signing the form you are stating that your financial situation is essentially similar to the day of application. The big issue here is that you want to keep your finances rather stable between application and closing. If you announce at closing that you just financed a new boat the other day, the closing would literally stop and we’d have to go back to underwriting to see if you still qualify!

HUD-1 Settlement Statement

This document is a list of where all the money is going. It shows the down payment, the closing costs, the prepaid expenses, loan amount, etc. The HUD-1 Settlement Statement will need to closely mirror the Good Faith Estimate that I provided to you at loan application. I provide the HUD-1 statement to you as soon as it is prepared by the title company, usually 1-2 days prior to the actual closing. From that statement I will be able to tell you how much of a cashier’s check you’ll need to bring to closing.

First Payment Letter

This is a form that shows you how much your payment will be including the principle and interest as well as escrow account. It shows where you need to mail your payments to and when they are due.

Mortgage and Mortgage Note

These documents contain your promise to repay the loan. These are standardized forms filled in with the details of your loan. The mortgage note shows the terms of the loan itself and defines the penalties for late payments, etc. The mortgage proves that the lender has a lien on your property and that you will relinquish your ownership rights in the house if you fail to pay.

The Fun Stuff

After you’ve been through signing all of the closing documents you’re ready to shake hands with the seller and call it a deal. You’re real estate agent will hand over the keys to your new palace. That’s the fun stuff. After all the work of going through pre-approval, finding the right home, negotiating a deal, the real moment of pride is right here—getting the keys to your home!