Closing the Mortgage Loan
Once your property is appraised and the financing arranged, a date is set for Closing
Day, also known as Settlement. It's the day you sign your loan documents and the property
officially becomes yours. Depending on your schedule, you may sign your loan documents
and related paperwork at the escrow office, or they may be delivered to you by a mobile
notary public who will oversee the signing process. The escrow officer or Notary will ask
you to sign the Promissory Note agreeing to repay the loan and a security instrument (Deed
of Trust) in favor of the lender which makes the property the security for the loan. If
a purchase, the escrow officer will have the Seller execute a Deed to convey title to the
property over to you. Once the documents are signed you'll pay the balance of the down
payment and your share of the closing costs if you haven't done so already. After closing,
the escrow officer will send the Deed of Trust to the County Recorders Office for recording.
Once recorded, the Deed will be mailed to you as the "grantee" and the Deed of
Trust is reposited with the lender. The Deed of Trust remains on record as a lien against
your property until your loan has been paid in full.
Mortgage Closing -- Your Important Papers
At closing you will receive important papers for your records, such as any written warranties,
receipts for the payments you made, Title Insurance papers and a Settlement Sheet (known
as HUD-1 Statement). Your HUD-1 Closing Statement will show the amounts you paid for the
down payment (if any) and other settlement and closing costs, including amounts you have
already paid. Be extra careful not to lose your HUD-1 Closing Statement. It can be a valuable
statement during tax time for deducting certain costs, depending on the loan you've received.
The Promissory Note which you will sign at closing is a negotiable instrument which
the lender can sell, assign or transfer to another investor without your consent or prior
knowledge. If this happens, you will receive instructions as to who and where to make your
new mortgage payments. However, your rights and obligations under the Promissory Note remain
the same as do those of the holder of the loan. For example, you may purchase your home
through Down-and-Out Savings Bank. Six months later, you receive a notification from a
"Washing Machine Bank" that you are to mail your mortgage payment to their address.
You may assume, therefore, that your loan has been sold to Washing Machine Bank. You still
have to make your payment, in full and on time. It's a good idea to verify that your payments
are being received and properly credited whenever your loan changes lenders, at least for
the first few payments. A secondary lender sometimes purchases hundreds of new loans at
once, but it's still your responsibility to make sure they handle your account with the
same effectiveness as the previous holder.
As always, feel free to call or email me with any questions you may have about obtaining
a loan.
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