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The Closing Process

 

The time it takes to close on a house, and get your mortgage loan application approved, usually runs anywhere from 30 – 60 days.

 

Closing Process

During the closing process, underwriters review your loan application, credit and financial information to make sure you can afford to make your mortgage payment each month. This process takes time- it can take an average of 47 days for to close on purchase mortgage loans.

The closing process begins after DCANS Mortgage (sellers in this case) accept a purchase agreement on the home you are buying. We would then go ahead and review your Online Mortgage Loan Application, a document in which you list your personal and financial information.

DCANS Mortgage will also review documents to help verify your financial information. Typically, you’ll have to send us copies of your two most recent payslips or paycheck stubs, last 2 months of bank account statements, last 2 years of SSNIT Statement and income tax returns. We may also study your credit report.

If we approve your request for a mortgage, we will schedule an actual closing date. During this time, you’ll meet in person – usually with your real estate lawyer and home providers present – to sign the documents that transfer ownership of a home from its current owners to you. Note that during the COVID-19 pandemic, your closing day might be an online-only event.

 

 

The House Closing Process: Step-By-Step

On your actual closing day, you’ll be signing what might feel like a mountain’s worth of papers. But all of these papers have their own purpose.

 

1. Signing Of Documents

Here is a partial list of the documents you’ll sign on closing day:

• The promissory note, which commits you to repay the mortgage loan.

• The mortgage (or the Deed of Trust), which gives your lender the right to foreclose on your property if you fail to make your payments

• The escrow disclosure, which lists how much you’ll be paying with each month’s mortgage payment to cover the costs of your property taxes and homeowners’ insurance.

• Proof of homeowners insurance

 

 

2. Paying The Closing Costs

Closing on a mortgage loan is not free. There are some of the closing or settlement costs you’ll pay during the process. You should know the final cost of your closing before you get to the closing table. Bring a certified or cashier’s check – not a personal check – written in this amount to cover the closing costs. You can also arrange to have your bank wire your payment on closing day.

 

 

3. Transfer Of Ownership

After the seller signs the deed, it will be registered. This filing ensures that the public records show that you are now the rightful owner of the property. Once recorded, you’re given the keys to your new home and can move in unless a delayed move-in has been stipulated in your contract.

 

 

How Long Does Closing Normally Take?

The length of time it takes to close a loan will vary, but you can expect your lender to finish the underwriting process within 40 – 60 days after you send in your completed loan application.

The type of loan you are applying for matters.

 

 

Things That Can Delay The Closing Process

Several issues could slow your mortgage closing process.

 

Financial Issues

Don’t delay on providing copies of your bank account statements, paycheck stubs / payslip or income tax returns to your lender. Your lender needs these documents to verify that you can afford your mortgage payment. If you don’t send these documents, and your lender can’t verify your income, your closing will be delayed.

There are two numbers that could scuttle your closing, too. Debt-to-income ratio measures how much of your gross monthly income your debts consume. Usually, lenders want your monthly debts, including your new mortgage payment, to consume no more than 50% of your gross monthly income.

Your credit score is another important number. If it’s too low, that shows lenders that you may struggle to pay bills on time or have had financial issues in the past. You can improve your credit score by paying down your credit card debt and paying your bills on time each month.

 

Appraisal Issues

Closings can be delayed when the appraised value of the home is less than the purchasing price. A lower-than-expected appraisal value creates problems for the mortgage process. Since the home will be used as collateral to protect your lender in the event you default, your lender will not offer you more money than the property’s appraised value.

If your appraisal comes back too low, you have a few options:

• Bring more money to the table to make up for the difference in price.

• Negotiate with the seller to lower the home price.

• Contest the appraisal if you think there's an error in the report.

• Walk away from the deal if you have a mortgage or appraisal contingency stipulated in your contract. (Know that you will not be refunded for the inspection or appraisal.)

 

Home Inspection Issues

Home inspections often reveal unexpected problems with properties. When these problems are minor, closings typically continue according to schedule. However, major issues with the foundation, electrical, plumbing – and even termite or water damage – can lead to significant expenses for home buyers.

Depending on the severity of potential issues, sellers may be willing to pay to eliminate them. Determining how to repair issues and negotiating with the seller to pay for them can prolong the closing process. However, if you have a home inspection contingency, you can break the contract without financial repercussions.

 

Title Issues

Lenders will run a title search on your new home before closing. If that search turns up liens – claims by other entities – against your home, it could cause a long delay in your closing. For instance, if your home’s previous owners failed to pay their property taxes, local governmental bodies might have filed a lien against your home. These unpaid debts must be paid, and the liens must be removed, before your home sale can close.

 

 

FAQs About The Closing Process

Still have questions about the closing process? Here are some of the more common questions and some answers to them.

 

Where Does Closing Day Take Place?

Your closing will most likely be held at a title company, management firm, or lawyer's office. Depending on your lender, closing day can take place at the home being purchased or another convenient location. Because of the COVID-19 pandemic, though, your closing might take place virtually. Your lender will go over your options with you.

 

What Do I Need To Bring On Closing Day?

You’ll have a million things on your mind the day you close but keep these items at the forefront. If you don’t bring them to closing, you may not be able to complete the process.

• Identification such as a driver's license, government-issued photo ID, or passport

• A cashier's cheque to cover your closing costs (if applicable), laid out in your Closing Disclosure

• Your Closing Disclosure to double-check the final paperwork

• A copy of your homeowners’ insurance policy

• A list of key contacts, like your real estate agent or attorney, in case any questions come up

 

Who Should Be Present On Closing Day?

Anyone who's listed on the loan will need to attend the closing. It's still possible to close on your mortgage if you aren't able to make it in person, but you'll need to grant someone power of attorney. You can also expect a representative from the title company to be at closing.

In some cases, the buyer and seller will be at the same closing, whereas in other cases, each party attends separate ones. In other words, you might see the seller at closing, but it's not a guarantee. Your real estate agent can also attend, although this is not required.

 

Closing a mortgage can seem stressful. You can ease this stress, though, by providing documents to your lender quickly and by answering their questions fully. The more information you provide them – and the faster you do so – the faster closing day will arrive.

 


 

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