After an appraisal is done, an underwriter will review the documents. Chances are the loan will be approved and I will be asked to pick a date for closing. It’s almost done.
Pick the Best Day of the Week for Closing
Does it make a difference which day you close the refi besides the convenience factor? Yes, for a refinance on your primary residence from a different lender, the short answer is:
Tuesday/Wednesday > Thursday > Friday >> Monday
I wrote about the reasons two and half years ago in Mortgage Refinance: Closing Process Explained. It has to do with how the calendar works with the 3-day rescission period.
Double Check the HUD-1
The Settlement Statement is on a government mandated form called HUD-1. It shows how much money I’m asked to bring to the closing and how that money will be used in conjunction with my new loan. There are many numbers on the HUD-1. Some are more important than others. I note here what I double check.
Lender fees are in 800 lines. Title insurance, settlement fees, and government recording fees are in 1100 and 1200 lines. I make sure these fees match what I agreed to in the Good Faith Estimate (GFE). If I paid for the appraisal separately already, I make sure it’s marked as POC – paid outside of closing – and I’m not charged again on the HUD-1. If I paid a deposit, I make sure it’s credited back on HUD-1.
Prepaid interest, tax, homeowners insurance, and escrow deposits are in 900 and 1000 lines. I don’t worry too much about these.
Get the Cashier’s Check
I got caught off guard once before. Now I learned to transfer money to a local bank account ahead of time. I may get away with giving a personal check, but it’s always safer to have enough money locally for a cashier’s check.
What to File and What to Shred
I sign many documents at closing but I don’t keep all of them. I only keep:
- The note – my promise to pay
- The security instrument – my pledge of my home as collateral for the loan
- HUD-1 – I keep it for tax records
- First payment coupon – I keep it until I receive the welcome package from the new lender
Everything else goes to the shredder.
Confirm Payoff and Escrow Deposit
I circle two numbers on the HUD-1: Line 104 is the payoff amount for the old loan; Line 1001 is the initial escrow deposit for the new loan.
After the expected funding date, I will check online to see when the payoff to the old loan is credited and whether the payoff amount matches line 104 on the HUD-1. It usually includes a few extra days of interest. I will get a refund for it from the old lender in a few weeks together with my escrow balance.
After I set up online access for the new loan, I will confirm they credited me the correct escrow deposit amount as shown on line 1001 on the HUD-1.
I never had problems with these amounts. It’s just an old habit: trust but verify. However, if the settlement agent paid off my old loan late, I will ask them to reimburse me for the extra interest I incurred.
This is part of a "How to Refinance" series of posts. Other posts in the series include:
- Mortgage Refinance: Is Your Lender Legit?
- Mortgage Refinance: Which Lender?
- Mortgage Refinance: Tradeoff Between Rate and Closing Cost
- Mortgage Refinance: When to Lock?
- How Much Money Does a Bank or Broker Make From a Mortgage Refinance?
- Mortgage Refinance: What If Rate Drops After You Lock?
Say No To Management Fees
If you are paying an advisor a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice.