How To Close A House As A Buyer

By Kaci Cooper, 23 Jan 17:44

The true moment of closing is when you become the final, legal owner of your new home. How the closing is handled depends on the region you live in and local customs. It may sound simple to simply pass the deed from seller to buyer, but the process is much more complicated in reality.

Who handles what leading up to “Closing Day?”
The closing begins when the seller and yourself sign the purchase and sales agreement which will dictate who handles the closing, usually a company recommended by your real estate agent. In some areas an attorney will handle the closing. The closing agent will handle all money, paperwork, and instructions from here on out. This usually takes four to six weeks, so what happens during that time?

-The closing agent, among many other things, is talking with the seller’s lenders to get loan payoff amounts, receiving instructions from your lender, prorating the property taxes, and preparing instructions for you and the seller.
-The title company will research the final ownership of the property.
-The lender prepares your loan documents and sends them to the escrow company.
-The seller is handling pest control, repairs, and other things you agreed upon in the closing contract. They also must call utilities for a final billing date.
-You, the buyer must complete your loan applications, get your homeownership insurance, and call the utility company to set up the utilities in your name after the last day the seller deals with the utilities.
-The real estate agents manage everything that is going on. They keep everyone with information on how things are going and when to meet up for the final closing.
-When the closing agent has prepared all the documents, they will tell you how much money you need to bring to the closing in the form of a cashier’s or certified check.
-If you worked into your contract a walkthrough twenty-four hours before closing, take your agent with you, so that they can help you ix any problems. You may discover that the stove will not light or that there are items in the house missing that were agreed to be left in. Problems at this point will likely delay the final closing or cause the escrow company to withhold money from the seller until all repair and finalizations are made.

The Closing
When everything is prepared and your agent is satisfied, the closing will begin. The set-up of the closing varies by region. In some areas, you never meet with the seller, merely your agent or the escrow company. However, if you live somewhere where an attorney handles the closing, everyone may meet around the same table. Electronic signatures may make your closing paperless; otherwise, the closing will take about two hours.

What to Bring to the Final Closing
-A certified check or cashier’s check. Federal law requires that you will be told, at least twenty-four hours prior to the closing, how much you owe and to whom.
-Proof of insurance, as well as a receipt showing that you have paid the insurance for the year. Your lender will require you to buy homeowner’s insurance.
-Photo ID, such as a passport or driver’s license.
-Your agent or attorney, especially if you are a first-time buyer, so that they can help you through the process.
-Purchase and Sales contract in case any details need to be checked.

Documents Related to Closing Your Mortgage
The following is a description of a few of the documents you will encounter during closing your mortgage:
-Promissory Note: This is an agreement that you will pay back what you have borrowed. Be sure to check this over carefully before you sign.
-Truth In Lending Statement: Before you sign your mortgage contract you will be given a “truth in lending” statement, also referred to as Regulation Z. This document will show your interest rate, annual percentage rate, the amount being financed, and the life of your loan. Look at this document carefully.
-Mortgage or Deed of Trust: This document states that you are putting your home up against any debt that you owe.
-Monthly Payment Letter: This paperwork breaks down your monthly mortgage payment showing how much goes to principal, interest, taxes, insurance, and any other costs.

Documents Related to Closing Your Real Estate Transaction
-HUD-1 Settlement Form: This document Itemizes the buyer’s and seller’s costs separately.
-Warranty Deed or Title: This deed transfers home ownership from the buyer to the seller.
-Proration Papers: These agreements explain how the buyer and seller are dividing up the property taxes, interest, and perhaps homeowner association dues for the month in which the transaction is taking place. Buyer and seller might also sign an agreement stating how current utility bills are being split.
-Statement of Information: This document eliminates any confusion between you and someone else with a similar name.
-Declaration of Reports: This acknowledges that the buyer has seen and signed off on the property and all inspections on the property.
-Abstract of Title: This document lists all the documents affecting the title to the property.
-Certificate of Occupancy: This document is issued by the building department, allowing buyers of new construction to move into their new home.

Take time to make sure that everything goes smoothly and in the right order. Buying a house is a big purchase and you want to make sure that you do it right.

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