B. What to Bring With You
– Your driver’s license or an acceptable form of a photo ID.
– A copy of your divorce decree (although the title company should have already asked you for this if they needed it, but be prepared and bring it with you).
– You’re going to need money. Most title companies do not accept personal checks. You should have received a HUD-1 Settlement Statement at least 24 hours before closing that shows all the costs and how much money you’re going to need at closing. Do NOT get a cashier’s check yet because the HUD-1 Settlement Statement can change.
Go to the closing early with your Realtor®, ask to see the HUD-1 Settlement Statement or ask the escrow officer the exact amount of money you’re going to need. Then, you can either sign the documents first and go get the cashier’s check or if you have time before your closing appointment, go get the certified check.
You can wire the funds to the title company, but I suggest a cashier’s check because a wire transfer could be delayed. After you sign the closing papers, you want the keys to your new home. If your wire transfer is delayed, you won’t be getting the keys to your new home until that wire has been confirmed.
– If you are going to hold title in a trust, be sure to bring your trust documents with you.
C. Closing Documents
We are going to go over some of the closing documents you will be signing at closing so you’re not completely freaked out at the closing table.
READ every document. The closing agent will be handing you documents for about an hour. She can explain what the documents are, but not what they mean (unless she’s an attorney). I’m going to say it again, read every document. If you don’t understand something, ask the closing agent to explain it or contact your lender to explain it.
I’ve seen closing agents get pissed off at buyers who actually “take the time to read” what they’re signing. Do not let a closing agent intimidate you. You’re going to read every document.
Truth In Lending Disclosure
This is one of the documents where homebuyers freak out. I’ve even had some clients cry. Don’t cry, okay? Or have some tissue handy. Closings are stressful, but you’ve got this.
When you see how much money you’re going to pay for your home – with the interest included – over a 30 year period, it’s very scary. If you want to pay your mortgage off early, refer to Chapter 3.
I AM NOT GIVING YOU LEGAL ADVICE. THESE EXPLANATIONS ARE MY OPINION ONLY. CONSULT WITH AN ATTORNEY TO GET A LEGAL OPINION ABOUT THE MEANING OF THIS DOCUMENT AND EVERY DOCUMENT YOU SIGN AT CLOSING.
Here’s a sample Truth in Lending Disclosure:
1 – This is where the lender’s information will be.
2 – This is where your information will be.
3 – Date, loan type and loan number goes here.
4 – This is your Annual Percentage Rate or APR. You will notice it’s not the same interest rate.
This is one of the most confusing items on a Truth In Lending Disclosure.
When you borrow money, your lender will tell you how much the interest rate will be. However, the lender adds other costs to your loan and that result is an Annual Percent Rate, APR. The APR is the total cost of borrowing money.
5 – Finance Charge. This is the total amount of interest you’ll pay if you have your loan for the full term.
6 – Amounted Financed. You’ll notice that this is not the amount of your loan. It’s generally less than your loan amount because some of the items you pay for are considered “prepaid costs.”
Fees that are included in the amount financed are:
– Points, if you are paying any points. (A point is a percent. One point equals one percent, two points equals two percent.) Points are generally paid to buy the interest rate down or the lender can charge you points because of your financial situation.
– Lender fees such as underwriting costs, processing fees, tax service, mortgage insurance, escrow company fees, prepaid interest to end of closing month, and any homeowners or property owner association fees.
All of these fees are added up and then subtracted from your loan amount. That’s the Amounted Financed figure.
7 – Total payments. This is what really freaks people out. They cry. Don’t cry. This is the amount you will have paid if you make all the payments for the entire term of the loan. Learn how to pay your loan off early in Chapter 3.
8 – This is the number of payments you’re required to make, the monthly amount of the payments, and when the payments are due.
9 – If you have a variable rate or an adjustable rate loan, the box will be checked.
10 – Payable on Demand. If the terms of your loan are payable on demand, one of these boxes will be checked.
11 – Security – One of the boxes will be checked to describe the security.
12 – Late charges – this is where the provisions for late charges will be.
13 – Insurance. You can get your own insurance. Make sure you take care of getting homeowners also called hazard insurance well before the closing date. Your insurance agent will send the necessary documents to the title company.
14 – This is how much the filing and recording fee is.
15 – Prepayment: Do not get a loan with a prepayment penalty.
16 – Assumption: This is letting you know if you sell your house, the new buyer may or may not be able to assume your loan.