What to Expect at Closing

The most fundamental real estate transaction is a “cash closing.” This type of transaction can be consummated by executing a handful of documents such as a Settlement Statement, Seller’s and Purchaser’s Affidavits, and Transfer Tax Form. However, a transaction involving a mortgage loan can require execution of (50) fifty or more documents. Some of these will be prepared by the closing attorney’s office, but the Lender will prepare most. The documents furnished by the Lender will include Federal and State forms as well as a host of others ranging from various affidavits to taxes. The following is a list of typical documents found in a loan-closing package. This list is not conclusive as each loan is unique and may vary somewhat according to the type of loan.

HUD-1 Settlement Statement:

Developed by the U.S. Department of Housing and Urban Development, this document itemizes the services provided, and fees and charges associated with closing the mortgage loan.

Representation Disclosure

Informs the Borrower(s) that the Closing Attorney’s Office represents the Lender/Investor and not the Purchaser or Seller.

Truth-In-Lending Disclosure

Discloses the “annual percentage rate” (APR) reflecting the cost of the mortgage loan as a yearly rate. This rate will probably be higher than the rate stated on the Note because the APR includes, in addition to interest, loan discount points, fees, and other credit costs. Additional information is also provided, such as finance charges, schedule of payments, late payment charges, and whether or not there is a prepayment penalty.

Promissory Note

The instrument the Borrower(s) sign which contains an unconditional promise to pay, on demand or at a fixed or determined future time, a particular sum of money to the Lender, a specified person, or the bearer of the Promissory Note. This document will outline the basic terms of the loan including names of Borrower and Lender, Interest Rate, Loan Amount, and period of repayment.

Mortgage

(With Appropriate Riders.) The instrument through which the Borrower(s) convey the subject property to the Lender as collateral (security) for the mortgage loan. This document will outline the terms and conditions of the mortgage loan.

Riders

These are Attached to the Security Deed, in certain circumstances. For example: A Planned Unit Development Rider where the subject property is located in an area with covenants providing for mandatory assessments (e.g. Homeowner Association fees) or an Adjustable Rate Rider for Adjustable Rate mortgage loans.

Survey/Waivers or Hold Harmless Forms

These are included based on the requirements of the given transaction. In some instances, mostly Refinances and Second Mortgages, only a copy of an existing survey is required. In cases where surveys are required when purchasing a home, the closing package will include a “hold harmless” agreement, which serves as notice to the Borrower(s) that such services were provided by an independent contractor.

Escrow Account Statement

Federally required disclosure on every residential mortgage loan with escrow accounts for payment of future taxes and insurance, reflects anticipated receipt and disbursement of escrow funds over the next (12) twelve months.

IRS Form W-9

Used by the Lender as verification of Borrower’s Social Security Number and for reporting interest deduction by the Lender to the IRS.

IRS Forms 4506/8821

Authorizes the Lender to request a copy of Borrower(s) income tax return directly from the IRS.

Occupancy/Employment Affidavits

Certify that the Borrower(s) intend to occupy the subject property as a principal residence and that employment status has not changed since loan application.

Flood Insurance

The Flood Protection Act of 1973 (Public Law 93-234) requires the purchase of flood insurance in certain flood prone areas as designated by the Department of Housing and Urban Development. Accordingly, Borrower(s) must purchase such insurance if the property is located in an area where flood insurance is required.

Corrections/Errors and Omissions/Compliance Agreement

Borrower’s Agreement to cooperate with Lender and Settlement Agent in correcting typographical or clerical errors in any mortgage documents.

Borrower’s Certification and Authorization

Borrower’s certification that all information provided to the Lender in association with the mortgage loan was true and correct and authorizing Lender to re-verify credit information.

First Payment/Coupon Letter

Most Lenders provide a temporary coupon for the Borrower(s) to make their initial mortgage payment in case the coupon payment booklet is not received in time for such payment.

Notice of Right of Rescission

Used in case of Refinance and Second Mortgages, not when property is subject of a sale. Gives the Borrower(s) the right under Federal Law to cancel the transaction, without cost, within three business days.

Warranty Deed

Instrument conveying title to real property from Seller(s) to Purchaser(s).

Owner’s Affidavit

Affidavit of Seller(s) certifying that the property is conveyed “free and clear” of any liens, claims or judgments.

Locations/Contact

www.floridacountymap.net

Miami:

9100 S. Dadeland Blvd.
Suite. 1000
Miami, FL 33156
View Map

p: 305.423.1258
f: 305.670.3884

e: greg@pinecresttitle.com

Atlanta:

4840 Roswell Road
Building E, Suite 400
Atlanta, GA 30342
View Map

p: 404.257.8885
f: 404.257.9771

e: sam@pinecresttitle.com