You’ve found a home to purchase, congratulations! So you and your real estate agent draw up a purchase offer with contingencies and your offer is accepted. What next? The real estate closing process, often called “escrow” or “settlement” is the process of completing the sale of a property. With many items to take care of many buyers hire professionals which serve to make the process simpler as well as protect your individual interests. There is most often a lot of paperwork with a lot of signing on both the purchaser and sellers behalf.
The professionals involved include; real estate agent(s), lawyer(s), lender (mortgage company or broker) and on occasion, land title representative. What to expect, what you need to do and what to bring to the real estate closing process are important items to review to keep your interests secure.
What to expect during closing?
In most instances, the closing title agent (lawyer) completes the paperwork needed to record the loan, transfer of taxes, closing costs and other claims that may need to be settled. For the amount to be credited to the seller, the closing agent will subtract the amount to pay off the existing mortgage.
You will also need to check the history of property ownership, to ensure that the records do not contain errors, unrecorded claims, or flaws in the review itself. This is why title insurance is necessary. In addition, a title search is usually required by most lenders. This will search public property records to make sure there aren't any liens or issues with transferring the property into your name. Title Insurance and a title search will protect you when you buy a property, making sure no one else can try to claim it as theirs later, making sure there are no third-party claims to a property. If there are problems, they will need to be solved before the property goes in your name
In addition to conducting a title search and making recommendation to a title insurance company for the purchaser of the property; a lawyer will coordinate communication between the seller’s attorney, lenders, the buyer and seller, the buyer’s prospective homeowner’s insurance company and the tax department.
A closing agent (lawyer) will also review the various documents related to the real estate purchase and mortgage. And is available to explain documents such as a deed, a note, a settlement statement, disbursement and the loan documentation required by the lender.
When all concerns are settled the lawyer then closes on the transaction and distributes all monies. Paying the title company its premium and all other fees and amounts associated with the transaction. Including any real estate brokerage fees, taxes that are payable, payoff existing loans, homeowner insurance premiums for the borrower, the bank or mortgage broker’s fees, seller’s proceeds from sale and the attorney fees for closing. The result is that title to the property is transferred from seller to buyer. The buyer receives the keys, and the seller receives payment for the home.
Before this day arrives, there some items for you to take care of to ensure that signing day will go as smooth as possible.
What you need to do
If you're getting a loan, one of the best ways to prepare is to thoroughly review your closing disclosure form (CD) settlement statement. It outlines your exact mortgage payments, a loan's terms (such as the interest rate and term) and additional fees you'll pay, called closing costs. Compare it to the good-faith estimate (the loan estimate, or LE your lender gave you at the outset); make sure they're similar and ask your lender to explain any discrepancies.
Complete your final walkthrough: Buyers usually have a final opportunity to walk through the property to assure no damage has occurred, and nothing has been removed that is included in the purchase. That its condition has not changed since the sale agreement was signed. If you'd had a home inspection done earlier and it revealed problems that the sellers had agreed to fix, make sure those repairs were made.
Check on the paperwork: Contact the parties involved to ensure all papers have been prepared; title companies, lenders, and lawyers. This paperwork is the sale agreement and allows all parties in the transaction to verify their interests.
What to bring to closing
All your paperwork: You will need to bring proof of homeowners insurance, a copy of your purchase contract with the seller, your home inspection reports, anything the bank required to approve your loan, and a government-issue photo ID.
Your down payment: You already know from your closing disclosure form how much you'll need for a down payment and closing costs. But a personal check is most likely not acceptable; be sure to ask before closing whether you should wire transfer those funds or if you'll need to bring a cashier's check. As well, bring your personal checkbook to closing, it’s usually fine to pay smaller fees with and may come in handy in case any unforeseen expenses show up.
Sign the Papers: One of the most critical steps of closing is signing the paperwork. There will be many pages (likely at least 100 pages). You may feel pressured by those who are waiting on you, but read each page carefully; the fine print will have a major impact on your finances and your life for years to come. Make sure the interest rate is correct and that there is no prepayment penalty. As well, compare your closing costs to the good faith estimate you were given at the beginning of the process and contest any fees that are off by more than 10%.
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