Closing the Loan

After the house is ready and the financing has been arranged, the lender will set a date for "settlement" or "closing." Settlement day is the day when the property officially becomes yours. You will also remember it as the "papersigning day." It generally occurs 30 days or more after the contract has been signed. It is a good idea to have a lawyer attend the closing with you. At this time the closing agent or attorney delivers closing statements to the purchaser and the seller. The closer will ask the purchaser to sign the promissory note, bond, or other evidence of indebtedness, promising to repay the purchase money loan; and a security instrument (mortgage or deed of trust) in favor of your lender which makes the property security for the loan. Be sure you understand what you are signing. If you do not have a lawyer, the closer or lender's or title company's representative will help you with the legal terms.

Do not be afraid to ask questions. The closer will ask the seller to execute a deed to convey title to the property to the purchaser. When the documents are in order you will pay the balance of the downpayment, if any, and your share of the closing costs. After the closing, the closer will record the deed and mortgage or deed of trust in the local property records. When recorded, the deed will be mailed to you as grantee and the security instrument to the lender. The security instrument remains on record as a lien or claim against the home until your loan has been paid off.

The promissory note which you will sign on the settlement day is a negotiable instrument which the lender may sell, assign or transfer to another investor without prior notice to you. Such a sale would transfer the lender's right to repayment of the loan and you might be advised of a change in the procedures to be followed in making your loan payments. However your rights and obligations under the security instrument would remain unchanged as would those of the loan holder.

At settlement you will receive important papers for your files, such as the builder's warranty (if you are buying a newly constructed house); receipts for the payments you make; a copy of the survey, if required, showing the boundaries of your property, and purchaser's closing statement or settlement sheets. If title insurance is common in your area, you may wish to consider purchasing an owner's title policy for your personal protection.

Your closing statement will show the amounts you owe for the downpayment, if any, and for other settlement costs, and any amounts you have already paid. VA regulations place certain limitations on the fees that may be charged. In general, you should expect your settlement charges to include those which were mentioned earlier in this pamphlet.