Getting Your Loan Funded
At The End Of Escrow When Documents Are Signed
Closing day with a real estate transaction is full of anticipation and excitement. This is the process of getting to the closing table where all final documents are signed, last minute conditions are met and money is exchanged.
Make sure that you update any and all pay stubs if needed to, also remember to put together a letter of explanation if your recent credit inquiries require further clarification on information found in a tax return.
These extra items fall into a category of “Prior-to-Closing” conditions that underwriters may require after they have view your file. There are 6 closing conditions that can delay Escrow, even though your lender may have provided a pre-approval and/or mortgage commitment letter, there may still be several conditions that could delay a closing.
Six Prior-to-Closing Conditions:
- Updated Income/Asset Documentation
- Credit Inquiries
- Employment Verification
- Funds for Closing
- Title and Judgment Searches
- Homeowners and Flood Insurance Coverage
These are all important items to have ready in case it is asked of by the underwriter to prevent any delays of Escrow.
Closing Terms of a Mortgage
Your real estate agent and/or mortgage loan officer should be providing you with a final list of documents that need signatures or updated verifications, so the general list of items needed at closing are quite basic.
Items to bring to your closing appointment are:
1. Funds for closing
If it is required for you to bring in the down payment and/or pay for closing costs to finalize the transaction, you’ll need to bring a certified check from a bank. The escrow company, your agent and loan officer should provide you with a full breakdown of all fees and costs involved in the transaction.
While these final numbers may be more accurate than the initial Good Faith Estimated which was provided at the beginning of the application process, there will still be a small buffer amount added by escrow to cover any prepaid interest or other minor changes.
If you don’t have to bring in any funds to close, then you might actually be getting a portion of the Earnest Money Deposit back.
Keep in mind, it is important to make sure these funds to close come from the proper sources.
2. Proof of Identification
Official Driver’s License or State ID card. Passports will work as well.
Common Closing Terms/Processes
Many borrowers go through the closing process in a haze, nodding, smiling, and signing through a bunch of noise that sounds like Greek.
Even though you may have put your trust in your real estate and mortgage team, it helps to understand some of the terminology so that you can pay attention to specific details that may impaact the decisions you need to make. Therefore, we have listed for you a few of the common terms used during the mortgage closing process.
Buyers sit on pins and needles through the approval process, waiting to find out if they meet the lender’s qualification requirements (which include items such as total expense to income, maximum loan amounts, loan-to-value ratios, credit, etc.).
The term “docs sent” generally means you made it!! The lender’s closing department has sent the approved loan paperwork to the closing agent, which is usually an attorney or title company.
Keep in mind that there may be some prior to funding conditions the underwriter will need to verify before the deal can be considered fully approved.
Just like what it implies. All documentation is signed, including the paperwork between the seller and buyer of the property.
This usually occurs at closing in the presence of the closing agent, bank representative, buyer or seller.
Show me some money!!!
The actual funds are transferred from the lender to the closing agent, along with all applicable disclosures.
For a home purchase, if the closing occurs in the morning, the funds are generally sent the same day. If the closing occurs in the afternoon, the funds are usually transferred the next day.
The timing is different for refinancing transactions due to the right of rescission. This is the right (given automatically by law to the borrower) to back out of the transaction within three days of signing the loan documents.
As a result, funds are not transferred until after the rescission period in a refinancing transaction, and are generally received on the fourth day after the paperwork is signed.
(Note – Saturdays are counted in the three day period, while Sundays are not). The right of rescission on applies to a property that the borrower will live in, not investment properties.
Let’s make it official. The recording of the deed transfers title (legal ownership) of the property to the buyer.
The title company or the attorney records the transaction in the county register where the property is located, usually immediately after closing.
With the list of translated closing terms, we hope that this will help you in understand just what these lenders are referring to at the time of closing your mortgage.
As with any other important financial transaction, there are many steps, some of which are dictated by law, which must be followed. One of the main reasons to make sure you’re working with a professional real estate buying team is the fact that you get to lean on their combined experience to ensure a smooth and painless closing.
Some agents and loan officers can close upwards of 20 plus transaction each month. Compared to the 5-7 homes an adult may purchase in his/her lifetime, you can obviously see where it helps to have a few trusted professionals in your corner.
The closing process can be argued as the most critical part of the real estate transaction where the most amount of things can go extremely wrong. This is where that professional team will really prove their value.
Joe Mortgage / NMLS# 348676
Joe is a mortgage lender in San Diego and is available at 818-657-2241 if you have questions about home loans or mortgage programs in California.
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