Home Title Company Explains Closing
You’ve found your dream home and you’re ready to buy. You’ve inspected the property, had a land survey done, performed a title search, and bought your title insurance. Your offer on the property was accepted, your sales contract and mortgage agreement have been drawn up, and you’re ready to close.
But what is the closing and how does it work? In this post, we’ll walk you through the closing process.
What is Closing?
Closing is the process by which the various parties involved in a property transaction come together to finalize the paperwork, pay all outstanding fees and costs, and the property is officially transferred from the seller to the buyer. The buyer receives the title and keys to the property, and the seller receives their payment.
Closing typically occurs at an office – like that of your realtor or title company – although much of the work is completed before the parties meet. Some parts of the closing process have become automated, requiring less people to attend, or allowing some payments to be made ahead of time.
Preparing for Closing
The relevant contracts need to be drawn up and double-checked. Due to TRID laws, buyers should receive a closing disclosure at least three days before closing, and a HUD-1 settlement statement 24 hours before closing. The sales agreement should already be finalized.
The buyer should do a final property inspection the day of or before closing. The buyer can then see that the seller has vacated the premises, and has performed any agreed-upon cleaning, renovations, and repairs. If things are not in order at the final walkthrough, the buyer can delay closing until the agreement is fulfilled. However, this may not apply if the buyer has agreed to keep renting the property to pre-existing occupants after purchase.
On the Day
At closing, the most important thing for both buyers and sellers is to simply sign all the paperwork, which falls into two categories: mortgage agreements between the lender and the buyer, and the sales agreements between the buyer and seller.
This sounds simple, but it’s a good idea to have your real estate attorney on hand to guide you through the process and ensure that everything is signed and filled out correctly. It’s also beneficial to read through these contracts with your attorney one last time.
As a buyer, you should also have placed your Good Faith deposit into an escrow account before closing day. At closing, the payment will be transferred to the seller. For both buyers and sellers, there may be other closing costs which need to be paid in cash or with a cashier’s check.
What to Bring
Here’s a quick checklist of what to bring to closing:
- Your identification (Two Types i.e. Driver’s License and Passport)
- Your checkbook and pen
- The closing disclosure
- A certificate of occupancy (if moving into a newly constructed home) – Provided by Seller
- The HUD-1 statement and Good Faith Estimate – Provided by Title Company
- All title search and title insurance documentation, including land surveys – Provided by Title Company
- Any associated contracts or paperwork (even if they’re not needed, it’s wise to have everything on hand as a precaution)
Both parties will also want their attorneys and realtors present, as well as a closing agent (usually from the title company, they provide written evidence that the transaction is complete). Someone representing the lender may also be at closing.