Closing is the eagerly anticipated culmination of the real estate transaction. The parties convene at the law firm or title company office to execute all required documents. The buyer and seller, if applicable, remit any funds due, and the attorney or settlement agent disburses funds as set out on the HUD-1 Settlement Statement. Following is a list of the documents that a buyer signs at a typical closing where the buyer obtains a loan:
HUD-1 Settlement Statement: sets out all receipts and disbursements made
by, on behalf of, or to the buyer and seller in the transaction.
Promissory Note: outlines the material terms of the loan including interest
rate, term, maturity date, principal and interest payment amount, late penalty and prepayment penalty.
Mortgage: (a/k/a Security Deed, Deed to Secure Debt, Deed of Trust,
Trust Deed, depending on the state in which the property is located) - secures the property as collateral for the loan.
Affidavits:
Where applicable, buyer executes sworn statements relating to:
•
owner-occupancy of the property;
• current
employment and income;
• name
variations or "aliases";
• the
non-existence of secondary financing;
• truth
and accuracy of all information supplied to the lender;
• other
matters specific to the particular transaction.
Disclosures and Acknowledgements:
Where applicable, borrower may sign
the following disclosures and acknowledgements:
•Acknowledgement
that a default in payment of the loan could result in a foreclosure;
•Acknowledgement
that the closing attorney/settlement agent represents the
lender;
•Disclosure
of the Annual Percentage Rate ("APR") as reflected on the
Truth In Lending Disclosure or "TIL";
•Disclosure
of projected escrow account activity for one year;
•Acknowledgement
that property is or is not located within a flood zone;
•
Acknowledgement
of receipt and review of survey; •Disclosure
of information relating to lender's history
of transferring/selling loans.
Loan
Application - standard form which reflects the income, assets,
debts and other pertinent information used to qualify borrower
for the loan.
IRS
form W-9 - verifies the borrower's social security number
for the reporting
of payment of
interest to the IRS.
IRS
forms 4506 and/or 8821 - authorizes the lender
to obtain information
from the IRS to verify information on
application form.
First
payment letter - shows total payment amount, date of first
payment and
information regarding where to remit payment.