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The Closing

What to expect on the Big Day

Closing your refinanced mortgage is almost exactly like closing on your home, often with one important difference. The right of rescission usually applies to refinances. This gives the borrower three days after the closing to make sure that the refinance is the right financial transaction for them. After the three day rescission period closes, the refinance funds will be disbursed.

The Location

Typically, you'll meet at the office of the attorney representing your lender.

The People

Among the people you may see around the table are:

  • Your attorney
  • Your lender's attorney
  • Your loan officer
  • A closing agent (representing the title company-this may be one of the attorneys present)

The Action

Over the course of approximately an hour or so, you and your lender will perform all of the following tasks:

  • You'll review and sign all loan documents.
  • You'll give proof that you have secured required homeowner's insurance.
  • You'll provide a certified or cashier's check to cover your closing costs
  • Your lender will disburse payment for the home loan amount to the closing agent after the rescission period. (Your lender will put a lien on the title until you pay your mortgage in full or sell your home.)
  • You and your lender will set up an escrow account if you are paying your property taxes and/or homeowner's insurance in your monthly mortgage payment.

The Paperwork

At the closing, you'll review, sign, and/or initial the following documents:

  • HUD-1 Settlement Statement. The final listing of your closing costs.
  • Deed of Trust or Mortgage. Documentation of the lender's lien on your property. Simply, you are agreeing to place the property as security in the event you default on your loan.
  • Promissory Note. Your "IOU" to your lender. By signing, you agree to make your mortgage payments in full, on time, and in accordance with all terms of your mortgage.
  • Interest, taxes, and insurance. Expect to potentially write one or more checks to cover the following:
    • Prepaid interest. This is interest that accrues between your closing day and the date your first mortgage payment is due.
    • Prorated property taxes.
      o Prorated homeowner's insurance