I'm about to close on a mortgage. What are the key steps I can expect in the mortgage closing process?
During this time, you sign legally binding documents in which you agree to pay back a loan and grant the lender the right to take back the house if you do not make the payments you agreed to.
The closing is a key final step in the purchasing and financing of a home.
Your lender transfers money that you are borrowing to the seller on your behalf, and the seller signs a document called a "deed," which is the legal document making you the owner of the home. The title company – or escrow company (in most western states) or closing attorney (in some eastern states) – prepares additional documents that support the transfer of the home to you and then records these documents with the county registrar’s office or county register of deeds. You may also have to sign additional documents that identify your rights and obligations as the home loan borrower.
Here’s what you can expect:
1. You will receive a lot of documents
Expect receive and/or sign many documents. These documents will include:
- Your Closing Disclosure
- Your promissory note, which is your promise to repay the mortgage loan to your lender
- The mortgage, also known as the security instrument or deed of trust. By signing this document, you agree that the lender may foreclose on your home if you fail to repay your mortgage
- The deed, which transfers legal ownership of the property to you
See an interactive sample Closing Disclosure and get our .
Note: For some of the documents you sign, your signature needs to be notarized (for example, on the deed of trust).
2. Transfer of funds
Money may also change hands. The closing or settlement agent (known as the escrow agent in western states) is responsible for collecting the money from the parties and paying it back out again according to the terms of the sale and loan. You’ll need to pay for your down payment (less any deposit you’ve already made) as well as costs associated with the closing. Sometimes the seller may pay costs related to closing to the lender. This is determined by the terms of your purchase contract. The lender provides the funds from the mortgage loan. The closing agent then pays out the price of the home to the seller and distributes the closing costs to the various closing service providers.
3. Taxes and insurance
You will need to show proof of homeowners insurance so that the lender will fund the mortgage loan. If your loan includes an escrow account, the account is set up and you make an initial deposit.
4. Transfer of Ownership
Once all of the documents have been signed, funds have been disbursed and the closing has been finalized, the transfer of ownership occurs. The seller, or a representative of the seller, gives you the keys to the new home, and the closing company, title company, escrow company, or attorney submits the mortgage and transfer of ownership documents to the county registrar’s office to be officially recorded.
Note: You won’t receive a Loan Estimate or Closing Disclosure if you applied for a mortgage prior to Oct. 3, 2015, or if you're applying for a reverse mortgage. For those loans, you will receive two forms – a Good Faith Estimate (GFE) and an initial Truth-in-Lending disclosure – instead of a Loan Estimate. Instead of a Closing Disclosure, you will receive a final Truth-in-Lending disclosure and a HUD-1 Settlement Statement. If you are applying for a HELOC, a manufactured housing loan that is not secured by real estate, or a loan through certain types of homebuyer assistance programs, you will not receive a GFE or a Loan Estimate, but you should receive a Truth-in-Lending disclosure.
If you have a problem with your mortgage closing process, you should discuss the problem with your lender. You can also submit a complaint to the CFPB online or by calling (855) 411-CFPB (2372). We’ll forward your complaint to the lender and work to get you a response, generally in 15 days.