WHAT TO EXPECT AT THE CLOSING
The term "closing" refers to the conclusion of the loan application process where the actual Promissory Note (Promise to Pay) and related papers are signed in order to establish the loan. In order to get to the point of a closing, a loan applicant must be approved for the financing. During the loan application process, the mortgage lender will typically place a request with a title insurance agency to conduct a title search and eventually, conduct the closing. Once the lender has approved the loan and notified their borrower, a date for the closing is scheduled.

At the closing, the title agency will have various documents that will need to be signed. A few of those in particular include: The Note, Mortgage, HUD-1 Settlement Statement, Truth-in-Lending Statement, final Loan Application form, and, unfortunately, many more. The actual number of documents are frequently determined by the type of loan program and the particular lender involved.

Typically, a closing will take anywhere from 30-60 minutes depending not only upon how many documents are to be signed, but how many questions you have about the various forms. Please note that most refinance transactions require that the lender provide you with a 72-hour time frame after the closing, during which you may cancel the transaction. The money cannot be disbursed until after the 3- day "Right of Rescission" expires.

Among the most critical documents at the closing are the Note and the HUD-1 Statement. The Note contains all the repayment terms of your loan such as the amount, interest rate length of years to repay, if there is any pre-payment penalty, when your payments are due and any late fees that may apply. Verify that these are the terms you agreed to or were expecting to receive from your lender. The HUD-1 Settlement Statement contains all the charges being paid in connection with your loan. This should be compared to your "Good Faith Estimate" which is a form that your lender should have provided to you shortly after you applied for the loan to project the estimated costs to be paid at the closing. While there are usually differences they should be relatively minor.

A frequent cause of "refinance frustration" lies with your previous loan payoff balance due to the fact that interest is in arrears and you usually have to re-establish your escrow account.

Escrow Accounts: If you are including property taxes and insurance with your new loan payments, your mortgage lender will require that you establish the account with a sufficient deposit so that when the various bills come due and based upon when your monthly payments begin, there will be enough money in the account to pay each item. Although it is typical for loan officers to estimate using a 2 months per item amount when they are preparing their Good Faith Estimate for you, the actual amount will depend upon the closing date and the date the next bill(s) are due to be paid. To further complicate matters, if your previous loan also included an escrow, it probably will be refunded to you in 30 days or so after the loan is paid. (will be refunded to you in approximately 30 days after the loan is paid) In many cases, even if you refinance with your same lender they may not be able to simply transfer your old escrow balance to the new loan. Although it may mean that you have to pay more at the refinance closing then you expected, remember that you should be receiving a refund from your previous mortgage lender soon thereafter.

Refinancing your mortgage can make a world of difference to your financial health. Remember to set your objective, select a good loan officer with whom to work, and communicate your objective to your loan officer. In approaching the process in this manner and armed with the above knowledge, you should be better prepared for the final closing.