You found the Illinois home of your dreams. You made an offer to purchase it and the seller accepted your offer. You found a mortgage lender who agreed to give you a mortgage. Now all you must do is go through closing. But you are nervous.
What is a closing? Who attends other than you? When does it take place? What are your responsibilities? The Home Buying Institute explains that your closing is the very last step of the process of buying your home. This is the time and place where legal title to your new home passes from the seller to you.
Most closings follow the following six-step process:
- You sign a bunch of legal documents.
- You present a cashier’s check to the escrow agent representing the amount of your closing costs.
- The representative from your mortgage company presents a check to the escrow agent in the amount of your mortgage.
- The escrow agent presents a check to the seller representing the amount of his or her sale proceeds.
- The seller signs a warranty deed passing legal title to the home from himself or herself to you.
- The representative from the title insurance company takes possession of the deed so (s)he can record it in the Recorder of Deeds office and then return it to you.
In general, your closing costs amount to about 3% of the amount of your mortgage loan. Early on during the escrow period, the time between when the seller accepts your purchase offer and when your closing takes place, your mortgage company will give you a Good Faith Estimate of what and how much your closing costs will be. Then a couple days prior to closing, your mortgage company will give you a HUD-1 Settlement Statement. This is the document that delineates exactly what closing costs you owe and why you owe them, item by item. Once you have the HUD-1 Settlement Statement, you will need to go to your bank and obtain a cashier’s check or certified check with which to pay the total amount of these costs at closing.
This is general educational information and not intended to provide legal advice.