The Mortgage Closing Process
How To Prepare For A Successful Loan Closing
Getting to the Final Closing Table
The final step in funding your loan or “closing” on your purchase is where all final documents are signed, last minute underwriting conditions are met, and money is exchanged.
At this point in the mortgage process, all inspections and appraisals have been completed, initial contracts and documens have been reviewed through underwriting, and it is time to sign your final documents.
What to Be Prepared for at Closing
A closing is where the borrower sits down with a notary, escrow agent, or attorney to complete the transaction.
Schedule Your Appointment
You’ll need to be ready to take enough time to sign all of your loan closing documents and have your questions answered.
Try to leave a few hours open after your closing appointment to prepare for delays so that you aren’t rushing through the important process of reading and understanding what you are signing.
Funds to Close
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.
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.
If you have not already provided your lender with updated paystubs or bank info, they may ask that you bring it to closing and have any other final documentation sent back with the final signed loan documents.
Proof of Identification
Official driver’s license or state-issued ID card.
FAQ’s About Home Values and Residential Appraisals
The answer to this question is no. The lender will order the appraisal through an independent third-party. You will need to be prepared to pay for the appraisal in advance, which can cost anywhere from $350 to $1,500, depending on the type of appraisal needed.
It isn’t fair, especially if your home is well-kept and in great condition compared to the run-down foreclosures in the neighborhood.
Unfortunately, if every recent sale, or nearly all sales, are foreclosures at reduced prices, then the appraiser is forced to use recent sales and trends as comparable values.
High foreclosure rates generally depress values and show a trend of constantly lowering value.
The purpose of an appraisal is to make sure that an independent non-interested third party verifies the “most likely” sale price based on the market value and condition of the home.
In addition, appraisers are governed by rules intended to standardize the subjective process of determining a home’s value.
Listing prices on the other hand are influenced by the real estate agent, and set by interested (and often emotional) sellers.
Often times, sellers will list their home based on the amount needed to pay for the real estate agent, closing costs, and cover the amount of the mortgages.
Unfortunately, no. Your down payment amount is based on the lesser of the appraised value or the purchase price. But, considering you will have immediate equity in your home upon closing, you are in a really good position!
Even though the neighborhood across the main street had similar homes in the higher price range, especially after the seller’s extensive upgrades, appraisers will always use homes from the actual neighborhood to establish value first.
Not all improvements to the property are equal in producing added value.
Even with cosmetic repairs, the property may still be much more comparable to the foreclosure next door than the new home a block away. Look first at the “guts” of the property: the electrical, heating & air, etc. If they are updated, then the number of beds/baths and square footage are the next biggest weight, followed by a genuine updating of cosmetic improvements.
In the case of an FHA loan, you cannot order another appraisal. Once an FHA appraisal is completed, the appraised value is logged into the FHA’s system for you and for any future buyers of that property.
While the appraiser will be evaluating many aspects of the home, it is always a good idea to make sure the property is as clean as possible to ensure the appraiser can move about easily. Also make sure all utilities are on and functioning properly at the time of the appraisal.