Refinancing My Home Loan Closing and Funding
When the loan is approved by the underwriter and all final documentation has been secured, the loan is ready to close.
The loan money is placed in an escrow account by the lender so it's available for the settlement. An escrow account is a special third-party account that holds money safely during the closing process.
A final good faith estimate of settlement costs is provided by the lender to the borrower to make sure there is full understanding of the various settlement costs associated with the loan. Closing costs often include such items as loan origination fees, credit reports, appraisal fees, inspection fees, title insurance, prepaid tax and insurance payments, discount points and recording fees.
At the time of settlement, often called closing, the escrow company presents all of the loan closing documents for the borrowers to sign, which is often done in the presence of a notary public. If a down payment or closing cost payment is required, the borrowers will bring a cashier's check. For refinance and home equity loan transactions, federal law requires a three-day rescission period after signing for the borrowers to review the documents before the loan transaction can close. During this period, the borrowers can cancel the transaction on a no-questions-asked basis.