What You Need to Know About Closing
The Final Step in the Mortgage Process
Congratulations! BCU has received all required loan documentation and you have been issued a final “unconditional” loan approval by the Underwriter. You’re ready to close! A mortgage closing is the final step in the process. It is a meeting of all parties involved in the transaction to sign the final loan documents and, if you’re purchasing a home, to transfer the property to you.
Your Home Loan Processing Specialist will work with all necessary parties to schedule the closing and coordinate the location. You should set aside at least an hour of your time to complete the closing.
- If you are closing on a refinance, BCU works with a nationwide title company with a network of traveling notaries that can typically meet you at a location of your choice to perform the closing, even your home or your place of employment. The notaries can accommodate most times throughout the day, including early morning and evening appointments. Please note that certain states may require your loan to close at a local title company or attorney’s office for regulatory compliance.
- If you are closing on a purchase, the date of your closing should already be set and documented on your purchase contract. Your Home Loan Processing Specialist will work with you, your real estate agent and attorney, as well as the seller’s attorney to coordinate your closing.
BCU will require at least 3-5 days advance notice of the closing date in order to prepare the loan documents, send them to the title company, and to obtain your final closing figures.
Your Closing Documents
After your closing has been scheduled, your BCU Home Loan Closing Specialist will prepare your set of closing documents and send them to the title company on your behalf. We will also provide you with a copy of your documents for your review prior to your scheduled closing date. It is important that you review these documents and alert us right away if you have any questions or feel there are any discrepancies. Making any necessary changes prior to your closing will help to prevent any delays. Please note that you do not have to print any of these documents. The notary will have the closing package ready for you to sign.
Your Closing Figures and Funds to Close: The HUD-1 Settlement Statement is the document that discloses the actual dollar amounts that you will pay towards the various fees, services, and payoffs associated with the closing of your mortgage loan. The “bottom line” of the HUD-1 Settlement Statement will reflect the amount of money you need to bring to your closing or the amount of cash back you are receiving. The title company is responsible for preparing this statement. This is done once they have received your closing documents and instructions from us. Once your Settlement Statement complete, you will be notified of your “bottom line” figure. If money is required to close, you should be prepared to bring only certified funds unless otherwise notified. Please note that the title company may require funds to be wired based on county or state mandate. If the appropriate funds are available within your BCU account, we can wire the exact amount to the title company on your behalf. BCU will not charge you for this service. Please let us know if you would like to take advantage of this convenient option!
Don’t Forget to Bring to Closing
- A Government Issued Photo ID Plus 1 Additional Source of Identification
- If you require funds to close, you’ll need to bring a Certified Check, a Cashier’s Check, or Wired Funds. Your Processor can help you to decide the option best for you!
- If you are interested in our automated payment option, please bring a voided check or deposit slip from the account you wish to have your payments made from.
Key Closing Documents
There are many documents you will be required to sign at your closing. The documents may vary slightly by state or county depending on specific regulations and disclosure requirements. However, the fundamental documents are the same for everybody, regardless of gender, level of income, national origin, or language. Federal law requires everyone to sign documents written in the English language as your final legally binding contract. Let’s go over some of the key documents you will sign at your closing and what they mean to you.
The Promissory Note (The Note)
The note is the formal executed promise you make to repay the mortgage loan according to the terms you’ve agreed to. It includes the amount you owe, the interest rate of the mortgage loan, the dates that the payments are to be made, the length of time to repay, and the location where your payments should be sent.
The Mortgage or Deed of Trust
The mortgage or deed of trust is the security instrument that conveys a lien on the subject property as security for repayment of your home loan. When you sign the mortgage or deed of trust (the specific document depends on the state the subject property is located), you are giving the lender the right to take the property by foreclosure if you fail to pay the loan according to the terms you’ve agreed to.
The Truth-in-Lending Disclosure Statement (TIL)
This document may look familiar to you because you received one in the beginning stages of your application process. It is possible that you will receive TIL statements throughout your process if there are multiple changes to the terms of your mortgage. You are entitled to a revision based on certain APR, Product, and fee changes to your home loan. Because of this, you will receive the final version of your Truth-in-Lending statement at the time you close. The TIL contains the amount being financed, the annual percentage rate (APR), the finance charge, and the payment schedule.
The HUD-1 Settlement Statement
The HUD-1 Settlement Statement is the document that discloses the actual dollar amounts that you will pay towards the various fees, services, and payoffs associated with the closing of your mortgage loan. Additionally, this statement includes a section that compares the charges on the Good Faith Estimate (GFE) to the charges on the HUD-1. The purpose of this section is to determine if your final costs fall within the allowable tolerance limits as compared to those that were disclosed to you on the Good Faith Estimate. The HUD-1 is prepared by the title company based on figures provided by the lender and seller (if applicable), the county recording costs, and title fees. The amount of money you will need to close your loan or, if applicable, the amount of money you will receive will be reflected on this document.
The Notice of Right to Cancel (applies to owner occupied refinance loans)
The Notice of Right to Cancel is a document you will receive when closing on a refinance of your primary residence. Under federal law, you have a legal right to cancel your mortgage transaction within 3 business days from the day of the closing. This 3 day period is often referred to as your “rescission period”. The document will specify the closing date and the last day that you must sign and return the document in order to cancel or rescind the loan. Each person signing the Mortgage or Deed of Trust will receive 2 copies of the Notice of Right to Cancel. One copy is signed and returned to the lender to acknowledge your receipt of the document and the other is for you to keep for your records.
Other Important Disclosures
There are several other documents and affidavits for you to sign at your closing. While it may feel like a lot of paperwork, all of these forms are important legally binding documents that outline the terms of your financial obligation that you are entering with BCU.