The Last Step Before Ownership: The Final Settlement

First Heritage Mortgage | November 20, 2017

The final settlement or closing, is the final step in the transaction. The settlement or closing date is set beforehand and on this date the parties consummate the purchase contract, and ownership of the property is transferred to the buyer.

Here are some items that deal with settlement:

Closing Disclosure

The Closing Disclosure is a five-page form created by the Consumer Financial Protection Bureau (CFPB) to inform borrowers about the final details of their selected mortgage loan and what will be paid at closing. The form lists loan terms, projected monthly payments, along with a breakdown of your closing costs and additional fees.

The Closing Disclosure is completed by the lender, and must be provided to you at least three days before the scheduled closing date. This three-day period allows you to compare the final terms and costs outlined in the Closing Disclosure with those included in the Loan Estimate, resolve any problems, and ask any questions regarding the loan.

Escrow

To finalize the sale of the home a neutral, third party (the escrow holder, a.k.a. escrow agent) is engaged to assure the transaction will close properly and on time. The escrow holder insures that all terms and conditions of the seller’s and buyer’s agreement are met prior to the sale being finalized, including receiving funds and documents, completing required forms, and obtaining the release documents for any loans or liens that have been paid off with the transaction, assuring you clear title to your property before the purchase price is fully paid.

The documentation the escrow holder may be collecting includes:

  • Loan documents
  • Tax statements
  • Fire and other insurance policies
  • Title insurance policies
  • Terms of sale and any seller-assisted financing
  • Requests for payment for various services to be paid out of escrow funds

Upon completion of all instructions of the escrow, closing can take place. All outstanding payments and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the property is then transferred to the seller and appropriate title insurance is issued as outlined in the escrow instructions.

At the close of escrow, payment of funds shall be made in an acceptable form to the escrow.

The Escrow Holder Will:
  • Prepare escrow instructions
  • Request title search
  • Comply with lender’s requirements as specified in the escrow agreement
  • Receive funds from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other documents as instructed
  • Request title insurance policy
  • Close escrow when all instructions of seller and buyer have been met
  • Disburse funds and finalize instructions

 

Mortgage Escrow Account

A Mortgage Escrow Account is established to pay on-going expenses while there is a loan on the house. These expenses include property taxes, home insurance, mortgage insurance, and other escrow items. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.

Once settlement is complete and all funds listed on the settlement statement (in form of certified or wired funds) are disbursed and the property exchange takes place, the deed is then recorded by the settlement company making the transaction official.

First Mortgage Payment

If you have received a loan from First Heritage Mortgage and you have questions regarding your first mortgage payment, please contact our customer service representative.