What Exactly Happens on the Day of Closing?
By Sadiya Anjum
After the property is checked out for title, the inspection is conducted, loan is approved and the final walk through is done, the day of closing finally arrives. The last day of escrow during a home buying process is usually called as closing. At closing, the buyer and seller finally settle the deal and property and funds exchange hands. Closing is also called as settlement or escrow in certain states.
It is the closing agent who will finally inform the parties involved about the date, time and place of closing. Before closing all other procedures such as title search, home inspection etc. should be carried out. Closing may take place at an attorney’s office or at the escrow company. Each area has its own settlement practices but this is a general guideline of what occurs on closing day.
The main parties who are involved include the buyer, seller, closing agent and seller’s agent. An attorney of either party, representative for title insurance and an escrow agent may also be present if the closing agent is a separate neutral party. The settlement is usually carried out by the closing agent.
On the day of closing, the buyer has to present the homeowner’s insurance policy. The seller has to provide proof regarding inspections, warranties and other relevant documents. The closing agent will list the money that the buyer has to pay to the seller which may include down payment, prepaid taxes etc. He will also list any amount that the seller owes the buyer in the form of unpaid taxes or prepaid rent etc.
The buyer receives a copy of the following documents on the day of closing: Mortgage Note, Title or Deed, Truth-in-Lending Statement, Settlement Statement and the Binding Sales Contract. Other documents specific to the transaction may also be included.
The buyer is allowed to review the various documents presented to him before paying the amount and signing. The buyer also has to shell out for closing costs which includes items like attorney’s fees, loan origination fee, title insurance, points, credit report etc. The full list is given to the buyer a day or two prior to closing and is called as the ‘settlement statement’ or ‘HUD-1 form’. The full amount is paid to the closing agent who distributes the funds to the various parties involved.
The buyer should take time to read all the documents and understand it fully. It may be wise to have an attorney present who can explain the various details. The buyer may even consider asking for the closing documents in advance so he can go through them with his attorney beforehand. He should also arrange the money required for closing costs ahead of time as it can be a substantial sum.
Once the documents are in order and signed, the keys are finally handed over to the buyer. The deed indicating the buyer as a new homeowner is now recorded in the State Registry of Deeds.
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