Talk the Talk – Know the Mortgage Lingo at Closing

What the heck are they talking about?

Many borrowers go through the closing process in a haze, nodding, smiling, and signing through a bunch of noise that sounds like Greek.

Even though you may have put your trust in your real estate and mortgage team, it helps to understand some of the terminology so that you can pay attention to specific details that may impact the decisions you need to make.

Common Closing Terms / Processes:

1. Docs Sent 

Buyers sit on pins and needles through the approval process, waiting to find out if they meet the lender’s qualification requirements (which include items such as total expense to income, maximum loan amounts, loan-to-value ratios, credit, etc).

The term “docs sent” generally means you made it!! The lender’s closing department has sent the approved loan paperwork to the closing agent, which is usually an attorney or title company.

Keep in mind that there may be some prior to funding conditions the underwriter will need to verify before the deal can be considered fully approved.

2. Docs Signed –

Just what it implies.  All documentation is signed, including the paperwork between the borrower and the lender which details the terms of the loan, and the contracts between the seller and buyer of the property.

This usually occurs at closing in the presence of the closing agent, bank representative, buyer and seller.

3. Funded –

Show me some money!

The actual funds are transferred from the lender to the closing agent, along with all applicable disclosures.

For a home purchase, if the closing occurs in the morning, the funds are generally sent the same day. If the closing occurs in the afternoon, the funds are usually transferred the next day.

The timing is different for refinancing transactions due to the right of rescission. This is the right (given automatically by law to the borrower) to back out of the transaction within three days of signing the loan documents. As a result, funds are not transferred until after the rescission period in a refinancing transaction, and are generally received on the fourth day after the paperwork is signed.

(Note – Saturdays are counted in the three day period, while Sundays are not). The right of rescission only applies to a property the borrower will live in, not investment properties.

4. Recorded –

Let’s make it official. The recording of the deed transfers title (legal ownership) of the property to the buyer. The title company or the attorney records the transaction in the county register where the property is located, usually immediately after closing.

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There you have it – an official translation of closing lingo.

As with any other important financial transaction, there are many steps, some of which are dictated by law, which must be followed.

how can we help you?

Contact us at619-858-4784. We are happy to answer any questions you have.

Great professional service

Craig was instrumental in me and my wife buying our first home together. I had a foreclosure, due to being laid off for a year, and without his assistance and knowledge of the buying and credit process, we would still be renting to this day. I believe he went above and beyond his basic duties, he spent extra time working with me to help clean up my credit to insure we would get the best interest rate. He was able to get us a great rate, even with my low score, and we were able to move into our new home.

Over the next few years, continuing to work with Craig we were able to increase our credit score and refinance our home a couple of times with lower interest rates each time. When we were ready to purchase a new home, he worked with us to insure the price was within our current budget and was able to secure a wonderful loan. He is also very knowledgeable in the VA loan process to insure a smooth transfer from one home to the other.

We are very pleased with the service and professionalism Craig provided us and will continue to work with him for all of housing finances in the future.

whitleyr1
Client, Oceanside, CA