Timing is everything when scheduling a transaction to close. If you’re renting, you may want to schedule the closing around the time that your lease ends. If you plan to do work on your new home, choose a date a month or two down the line before you leave your rental. If you’re moving out of a house that you’re selling, you will need to juggle between two closing dates. Schedule the closings in the correct order, since many people need the cash from the first home to pay for the second home. When considering your mortgage, make sure the closing date is set before your interest rate expires. If you plan to move the day you close, be sure to schedule the paperwork as early in the day as you can. This will save time and headache.
Many closings are categorized into two closings: the closing of the purchase of your home, and the closing of the mortgage loan to buy the real estate. Your lending statement or “Regulation Z” is important because it discloses your interest rate, annual percentage rate, the amount that is being financed and the total cost of the loan over its lifetime. Be sure to check and double check the numbers before signing. Expect a Monthly Payment Letter, which reveals the breakdown of your month payments, interest, taxes, insurance, and escrow fees. The Note, where you are actually borrowing money and giving your personal guarantee that you are going to pay it back, is extremely important in double checking. Be sure everything adds up before signing this. And finally, the mortgage, where it’s a lien on the house as security for the loan allows the bank to foreclose if you default on the note mentioned above. Take deep breathes when signing these two forms.
Now there are the real estate documents that make the house yours. There’s quite a few forms here, so be patient. The first form is the HUD, which contains all the settlement costs and amounts. The closing agent will go over this with the buyer and seller. Pay great attention to this form and read it all over carefully. The Warranty Deed is the document that is brought to everyone’s attention. It includes the name of the buyer, seller, and the description of the property. It guarantees that the seller has the right to sell the property and transfers the title of the property. Next is the Proration Agreement, where it describes how you and the seller are dividing up the costs of the house for the month in which it is being purchased. The seller may have already paid property taxes, for example, and so the buyer needs to reimburse the seller for the taxes that covers the time after the buyer takes over the property. The next few documents are the tax and utility receipts, where you sign city and state receipts that it has been paid by the seller or will be paid by the buyer, and the Name affidavit, basically clarifying that you are you say you are. Lastly is the Abstract of Title, which just shows you a record of the property’s history.
The closing date is the day you hand over the money, so be sure you have the correct amount and check in hand when you go into the day of closing. Expect to pay closing costs, which are a portion of the costs that vary from state to state and are usually negotiable. You’re also paying for the down payment (if any) of the home at this time, and giving it to the closing agent along with the lenders check for the balance. And finally, escrow fees, where often times the buyers annual taxes and insurance are paid through the lender.
Smile. Deep Breath. Go get your keys!
A Closing may be the end of the house and buying process, but it’s the opening curtain on your new life as a homeowner.
Your Local Real Estate Expert,