Whether you are just getting started in the home buying process or you are approaching the last hurdle (the close), it is important to understand what exactly to expect on the final day to make a smooth transition from a potential buyer to a proud homeowner. Lets talk about THE CLOSE!
Who will be attending
The exact number of folks at your particular closing depends on many things. These include things like the property's location, your home type, and the nature of your purchase. The difference here can be if your purchase is all-cash versus a traditional mortgage. Here are a few folks you may expect to be present.
- A lender representative
- The sellers rep
- The seller's attorney (if they have one)
- Your attorney (if you have one)
- Your real estate professional
- The seller's real estate professional
- The Closing Agent (title company rep)
- A notary public
Now I have been to many closings where it was just my client, closing agent, and I because the seller and their professional had already signed all needed documents. This makes for a nice, easy, and smooth meeting at the closing table.
Closing costs are costs the are associated with your loan. It is crucial to budget for these cost so there are no surprises at the closing table. These costs may include things such as recording fees, loan origination fees, appraisal charges, discount points, attorney fees, and title insurance. These are unique to your loan so there may be more. Closing costs usually totals to an amount of 2 to 5 percent of your home's final purchase price. Most bank websites have a closing cost calculator so you may have a good idea of what your costs may be.
You will have a much better idea of these costs when your lender provides you with an Initial Loan Estimate. You will receive this within three business days after submitting your mortgage application. When your loan is approved by your lender, you will receive a Closing Disclosure form, which lists your finalized closing costs.
What your job is at closing
Typically, the closing is held at the office of one of your representatives. The title company or the lender's. This is what your job is:
- You provide all documentation of homeowners insurance and inspections performed (if applicable)
- You will review and sign all of your loan documents. The closing agent's job is to walk you through each form so you completely understand each document and what exactly you are signing. Your real estate profession will be there to help double check all of the terms to insure they are the original terms you agreed too.
- If you have not already wire transferred funds to cover the down payment (if applicable), closing costs, taxes, prepaid interest, and insurance, you will provide a certified check or cashier's check to do so.
- You may be required to set up an escrow account to cover property taxes and homeowners insurance in addition to your mortgage payment. This one depends on your loan terms.
Your lender will then distribute the funds that will cover your home loan to your closing agent.
Three main closing docs
The three main documents to review and sign at closing are the following:
- Deed of Trust or Mortgage - This document puts a lien on your home as collateral for your loan
- Promissory Note - Legal agreement to pay the lender. This includes when and where you will be making your payments.
- Closing Disclosure - This is an itemized list of your final credits and charges based on the terms of your contract. You will receive your own copy of this document at least three days before your closing.
By being prepared for your closing you can save a serious amount of time at the closing table. Having a good understanding of the process to come will not only save you time but also make you extremely confident as you start this new chapter in your life. Remember to review every document carefully.
I wish you the best in this new journey to homeownership. If you have any questions or would like to speak to me directly with any concern, please email me at firstname.lastname@example.org . Thank you for reading!