Closing Day: The good, the bad, and the paperwork

Real estate closing day…the most anticipated and dreaded of all days. As if the emotional roller coaster of finding a home, putting in the offer, offer acceptance, and inspections weren’t enough, you aren’t quite finished, but at least there is a light at the end of the tunnel.

Typically, on closing day, you will be signing two sets of documents, the first is the purchase of the real estate, and the second is the mortgage loan you will be taking on to pay for the real estate. The seemingly thousands of pages of paperwork will have to do with either of these two transactions. Many of these documents are similar in different areas, but some may be unique. The documents listed below are typical in the Nashville real estate market.

At the closing table, there will be an attorney to walk you through each of the following documents, but here is an overview of what you will be expected to read and sign.
- Truth in lending statement, also known as Regulation Z. This document discloses the interest rate, annual percentage rate, amount financed and the total cost of the loan over its life. Make sure that these numbers should match the numbers that you have already received from your loan officer, speak up if the numbers don’t match up.
- Itemization of amount financed. This document basically summarizes the finance costs, such as points, and is more of an addendum to the document above.
- Monthly payment letter. This document breaks down your monthly payment, again make sure that these numbers match the ones that you received previously.
- Note. This is the document where you are actually borrowing the money.
- Mortgage. This document basically states that if you default on your mortgage, that the bank will place a lien on your new home, as security for the loan.

Now that the stressful, money part is out of the way, its time to make the real estate yours. Here are some common documents that will be asked to sign.
- HUD Form 1 or Disclosure/Settlement Statement. This is the actual settlement amounts, again watch for errors.
- Warranty deed. This document transfers the title of the property from the seller to the buyer.
- Proration agreements. This document pro-rates money, for the month that you are closing, i.e. home owner’s association dues, etc.
- Tax and utility receipts. Again, this is transferring information from the seller to the buyer at the State level.
- Name affidavit. This basically says that you are the person you claim to be.
- Acknowledgment of reports. This verifies that the buyer has seen inspection, termite reports, etc.
- Search or Abstract of Title. This is basically documentation of the history of the house.
I know that you didn’t think you were going to get out of closing without coughing up a little cash, so here are the remaining closing items.
- Closing costs. This is the time to write that big check that you’ve been dreading.
- Payment for the house. This is where the buyer writes a check for the down payment, minus any deposits, which is then combined with the lender’s check for the remaining portion of the purchase price.
- Escrow Account. More often than not, the buyer's annual taxes, insurance and other items are paid through the lender. The account is set up at this time.