This will be the third version of this post since I started writing The Mortgage Porter in late 2009. Things have overall changed for the better for consumers when it comes to the closing procedure. Last month, two new disclosures, the Loan Estimate and Closing Disclosure, were introduced replacing the Good Faith Estimate and HUD-1 Settlement Statement effective for loan applications dated October 3, 2015 and after. This post applies to loans originated after October 3, 2015. If your loan application is dated prior to October 3, 2015, you should refer to this post instead.
- Contact your Mortgage Professional to find out when you can expect your Closing Disclosure. The Closing Disclosure will be provided to you before you can sign your loan documents. Depending on when and how the Closing Disclosure was delivered, the lender cannot prepare the loan documents until they know the date the Closing Disclosure was signed. I recommend doing a final review of the terms of your purchase and sales agreement, including (and not limited to) any changes to the sales price or closing credits or the closing date. Ideally, you should be conveying any changes to your Loan Officer as soon as they happen – do not assume your Real Estate Agent has done so.
- Sign and return your Closing Disclosure at least THREE BUSINESS DAYS before signing. Your Closing Disclosure shows all the fees that are involved in the transaction. It will also show you the funds for closing. The Closing Disclosure should compare to the last Loan Estimate that you received. The title fees quoted on Closing Disclosure should be more accurate than what the CFPB currently requires to be quoted on the Loan Estimate. If you have any questions or concerns about the Closing Disclosure, contact your Lender ASAP as a new Closing Disclosure may need to be prepared. Again, it is CRITICAL that you return the signed Closing Disclosure ASAP to your lender. The Closing Disclosure must be signed by all parties, including non-borrowing spouses on primary residences. The wait period is mandatory and cannot be waived. The CFPB does not care if your lock or contract is expiring. :/
- Bring your Mortgage Originators contact information. When your signing appointment is set, contact your mortgage originator to find out if they will be available during your signing and how is the best way you can reach them should you have any questions. Some signers (not all are escrow officers) are better at answering questions than others. If you have questions about the documents you are signing, you can pause the signing and call your mortgage originator. There are times I’ve attended signings for clients, especially first time home buyers, when location and schedule permits. I always try to be available to answer any questions that may arise during a clients signing.
- Bring a cashier’s check or make arrangements to wire funds for closing. With the Closing Disclosure provided to you three business days prior to signing, you should have enough time to arrange for your funds for escrow. You need to obtain a cashier’s check payable to the escrow company and bring it with you to the closing appointment. A personal check or cash is a no-no. If you are considering wiring funds to the escrow company, please contact them in advance to discuss this process. NOTE: You must use the funds for closing that you have discussed with your lender. This is not the time to pull funds from a different account other than what is expected or to get a gift from Uncle Harry.
- Bring your current driver’s license. The notary must see them for proof you are you! Some may require two forms of identity. Contact your escrow officer to see what they require.
- Bring anything else that the escrow company or lender request. Sometimes the lender may need you to bring follow up documentation to closing (such as original signed documents, most recent paystub, etc.).
- Bring directions to the escrow company. Be sure to get specific directions to the escrow company from the escrow company (or visit www.mapquest.com). Please be on time. Escrow companies are often very busy and are generally on time.
- Plan on your signing taking approximately 45 – 60 minutes. If you would like to have more time to read your documents, or to have an attorney review them for you, ask your lender in advance so they can accommodate having a copy of your loan documents available to you in advance. Your loan package is about an inch of paper. If you want to read it word for word, you should obtain a copy in advance.
- Sign your documents as your names appear. Sign your name within the County’s required borders for recordings. This avoids last minute corrections or delays in your closing. You may want to do some hand exercises before signing (just teasing—well, kind of). Do sign your name exactly as it appears on the loan documents – if there’s a middle initial, sign with it. If you sign your name differently throughout the loan package, you may have the joy of re-signing your loan documents. NOTE: I’ve only had this happen once and this person signed her name several different ways throughout her final documents. As a result, she had to sign again and her closing was delayed. There is no way an investor would have accepted legal documents with varying signatures. If you have a preference with how you want your name to appear on the loan docs, you need to express this at the beginning of the loan process.
After signing your documents, escrow sends the original required documents to the title company who, after reviewing, delivers them to the County where the property is located. With our company, the funding department also reviews the loan documents and verifies all conditions are met. At this point, the lender coordinates with the escrow company to release the funds and to record the documents on the scheduled day for closing. This is a photo of the King County Recording Department’s “recorders closet” for title companies and others who do recordings in masses.
Signing and funding (closing) typically do no take place on the same day. Typically the latest I like my clients to sign is two days before closing with a purchase (sometimes it may wind up being the day before).
With a refinance for an owner occupied property, signing takes place about five days before closing because of a mandatory three day waiting period before the loan can close. With the new Closing Disclosure, the three business day wait period period takes place before you can sign your mortgage documents and then, once you have signed, you have an additional three day right of rescission.
Once your transaction is closed, you may be notified by your real estate agent, escrow officer, mortgage originator or all the above.
After closing you will receive a final Closing Disclosure/