Once your application for a mortgage loan has been approved, the final steps is the closing, or settlement, of your purchase or refinance transaction. If you are purchasing a new home, even though you have signed a purchase agreement and your loan request has been approved, you have no rights to the property, including access, until the legal title to the property is transferred to you and the loan is closed. Please navigate the closing section of our web site so that you will have a good understanding of what is involved in the closing process.

At closing, you will sign the mortgage loan documents, the seller will execute the deed to the property, funds will be collected and disbursed, and the closing agent will record the necessary documents to give you legal title of the property. Settlement of a mortgage loan is a legal process with specific procedures and requirements that vary according to location.

Between Approval and Closing

Once we issue a preliminary approval we will set an estimated closing date. We will try to set this date as close to the date specified in the sales contract. A firm date will be established once the appraisal is received and your application has been approved for closing. If repairs or maintenance on the property are a part of the lender's commitment, there must be time to complete them.

Several standard documents are generally required for a loan closing; some of these will be your responsibility, some the seller and others will be our responsibility. The following documents are typically required for closing:

Title Insurance Policy: Troy Bank and Trust requires title insurance. The closing agent will research legal records to make sure that you are receiving clear title, or ownership, to the property. Their title search will establish that the seller of the property is the legal owner, and that there are no claims, or liens, against the property. The title company offers both a lender's policy and an owner's policy. You will have to pay for a lender's policy and it may be advisable for you to have an owner's policy as well. For a small additional premium, the owners policy will protect you up to the full value of the property if fraud, a lien, or faulty title is discovered after closing.

Homeowner's Insurance: Troy Bank and Trust will require you to have homeowner's insurance on the property at least in the amount of the replacement cost of the property. You should make sure the policy covers the value of the property and contents in the event they are destroyed by fire or storm. Generaly, you must pay for the policy and have it at closing. You are free to select the insurance carrier, but we will require the company to meet rating standards and be rated by a recognized insurance rating agency.

Termite Inspection and Certification: On purchase transactions, Troy Bank and Trust will require that the property must be inspected for termites and an official wood infestation report received. Any active termites will have to be treated and damage be repaired before the loan can close. If previous damage is found, the damage will have to be repaired before loan closing. Generally, the real estate agent will order the wood infestation report. If you are buying a For Sale By Owner property, it will be your responsibility to provide the wood infestation report 3 days prior to closing.

Survey or Plot Plan: Generally, we do not require a survey of the property, showing the property boundaries, the location of the improvements, any easements for utilities or street right-of-way, and any encroachments on the boundaries by fences or buildings. We will require a survey if, for any reason, the closing agent can not provide title insurance without a survey.

Flood Insurance: If we determine that the property is located within a defined flood plain, you will want, and we will require, a flood insurance policy. The policy must remain in force for the life of the loan.

Certificate of Occupancy: If your home is new construction, you will have to have a Certificate of Occupancy, usually from the city or county, before you can close the loan and move in. Usually, the builder will obtain the certificate from the appropriate authority.

Other Documentation: If any additional documentation is required for closing we will notify you as soon as possible. Examples would include private road maintenance agreements if the street in front of your property is not maintained by a municipality or proof of sale of your previous home if that was a condition of approval of your loan.

Prior to the actual closing, you and your real estate agent should make a final inspection of the property to make sure that any required repairs have been completed, all property described in the sale contract, such as kitchen appliances, carpeting and draperies are present and that no recent fire or storm damage has occurred.

The Loan Closing

Generally, we will close the loan in the closing agents office. We will send the closing agent our instructions and documents that will be needed to conduct the closing. The actual closing is conducted by a closing agent.

The closing agent will have received instructions from us on how the loan is to be documented and the funds disbursed and will collect all of the necessary exhibits from you, the seller and the lender. The closing agent will make sure that all necessary papers are signed and recorded and that funds are properly disbursed and accounted for when the closing is completed.

You typically need to come to the closing with a certified check for the closing costs, including the balance of the down payment. You can get the exact figure from the closing agent prior to closing. You should also bring the homeowners insurance policy and proof of payment if it has not been delivered earlier.

For the most part, your role at closing is to review and sign the numerous documents associated with a mortgage loan. The closing agent will explain the nature and purpose of each one and give you the opportunity to check them before signing. A brief description of the major documents may help you understand their purpose and significance.

Settlement Statement - HUD-1 Form:  This form is required by Federal law and is prepared by the closing agent. It provides the details of the sale transaction including the sale price, amount of financing, loan fees and charges, proration of real estate taxes, amounts due to and from buyer and seller, and funds due to third parties such as the selling real estate agent. It must be signed by both buyer and seller and it becomes a part of the lender's permanent loan file.

Some of your charges on the HUD-1 may have already been paid, such as credit report and appraisal fees. They will be noted as P.O.C. (paid outside the closing). You will usually be charged interest on the loan from the date of settlement until the first day of the next month.  Your monthly payment will be due on the first day of each month.  Make sure you know exactly when your first and subsequent payments are due and what the penalties are for being late.

If your loan is greater than 80 percent of the value of the property, you will probably have to pay for mortgage insurance that protects the holder of your loan in case you default.

In addition to your monthly payments on the loan, we will require you to maintain an "escrow" account for real estate taxes and insurance if you borrow more than 80% of the value of your home. Additionally, real estate taxes for the current year will be pro-rated between you and the seller and paid at closing. After closing, you will remit 1/12 of the annual amount with each monthly payment.

Truth-in-Lending Statement (TIL): This form is also required by Federal law. You will be given an initial TIL shortly after you complete your loan application. At closing you will receive a corrected TIL.

The Mortgage Note: The mortgage note is legal evidence of your indebtedness and your formal promise to repay the debt. It sets out the amount and terms of the loan and also recites the penalties and steps the lender can take if you fail to make your payments on time.

The Mortgage: This is the "security instrument" which gives Troy Bank and Trust a claim against your house if you fail to live up to the terms of the mortgage note. It recites the legal rights and obligations of both you and us. The mortgage gives us the right to take the property by foreclosure if you default on the loan. The mortgage will be recorded, providing public notice of our claim (lien) on the property.

Miscellaneous Documents: There will be a number of documents or affidavits that you will be asked to sign at closing. Some are Troy Bank and Trust requirements (e.g. a statement that you intend to occupy the property as your primary residence), or are required by state or Federal law. These instruments should not be taken lightly. Some provide for criminal penalties for false information, and some may give us the right to call your loan, which means the entire loan amount becomes immediately due and payable. When everything has been signed and the closing agent is satisfied that all of the instructions for closing have been complied with in full, you become the owner and are given the keys to the property

Please take a few minutes and navigate to the pages in our website to obtain more information related to the closing process.