You've made an offer on your dream home, and the sellers have accepted. You've had the home inspected. Now you're ready to close on your mortgage loan and officially take over possession of your new home. You know that you'll owe money once you get to the closing table to cover closing and settlement costs and the down payment on your mortgage loan. Just don't expect to pay for those costs with a credit card.
Closing a mortgage loan is far from inexpensive. Financial website Bankrate reported that in 2012, it cost home buyers an average of $3,754 to close on a $200,000 mortgage loan. These costs might be even higher for you, depending on the size of the mortgage loan and the state in which you live. You'll also need to pay for your down payment at the closing table. The size of a down payment can vary widely, but home buyers typically pay from 5 percent to 20 percent of their total mortgage loan. For a $200,000 home loan, the down payment will typically range from $10,000 to $40,000.
You must pay for these costs at the mortgage closing, an event that usually takes place at the offices of your title insurance company. But don't bring your credit card or a personal check; the title company won't accept these forms of payment.
You'll need to submit a cashier's check or wire cash electronically to pay for your closing costs and your mortgage loan's down payment. Your real estate agent or mortgage lender will tell you before closing day exactly how much you need to bring to the closing table. Ask the title company to whom to make out your check. Some will want you to make the check out to them. Others might ask you to make the check payable to yourself. That way, if the closing reaches a successful conclusion, you can sign it over to the title company. If a problem arises and the loan isn't closed, you can then redeposit the check made out to yourself into your bank. You should make sure that the settlement costs that you are being charged match the amounts listed on your HUD-1 settlement statement. This statement itemizes the services and fees charged by your lender. You have the right to examine this statement at least one day before your loan closing.
What Happens Next
After you sign your mortgage documents and use your cashier's check or wired funds to pay for your closing costs and down payment, your lender will typically wire the funds to cover your mortgage loan to your title company. You will then receive the keys to your new home.
Don Rafner has been writing professionally since 1992, with work published in "The Washington Post," "Chicago Tribune," "Phoenix Magazine" and several trade magazines. He is also the managing editor of "Midwest Real Estate News." He specializes in writing about mortgage lending, personal finance, business and real-estate topics. He holds a Bachelor of Arts in journalism from the University of Illinois.