Bringing it all "Home" -- the
the searching for a home is done, the negotiations have been completed, the house has been inspected, and the mortgage
has been applied for and committed to, the focus suddenly turns to the Closing, Settlement, or Escrow as it is known in some localities. For simplicity, in our discussions here we will refer to the process when it all
comes together and you finally own the home as Closing. An understanding of the elements of and players in the closing, as well as a concise
preparation for it, will eliminate many nervous hours as the day approaches.
What is involved?
It is the proverbial "signing on the dotted line:" the process
of which will put the title to the house in your name, verify homeowners' insurance on the property, commit in
writing to the terms of the mortgage, and usually, put the keys to the house in your hands. In general, you will
leave the closing and go to your new home as a homeowner. The weeks and months of anticipation are all settled
in the short amount of time that you spend at the closing.
Closing procedures will vary from locality to locality. In some areas, the buyers and sellers (as well as their
Real Estate Agents) will all attend the closing. In other areas, only the buyers will be present. The closing will
take place at the office of an Attorney, a Title Company, or an Escrow Company (again, there is some variance here
based on your local laws and tradition). In general, though, the closing will be attended by all of the buyers
involved and their Real Estate Agent, as well as the Closing Agent, who has reviewed all of the components of the
house sale and who is the one who will say "sign here" more times than you have ever heard in your life.
What forms are involved?
Although there may be additional documents involved, the primary items
which are dealt with at the Closing are:
The Settlement Statement--Page 1 and Page
The Loan Papers
The Title or Deed
Down Payment and Closing Costs
The Closing is your final opportunity to make certain that everything related to the purchase of your home is correct.
It is important, therefore, that you do adequate preparation prior to the day of Closing. Although your Agent will
most likely review all of the items needed with you, it is a good idea to have the right information in case you
need to handle it on your own.
What items will we need?
The following are the most important items that you will need prior to
or at closing and some hints regarding them:
A Closing cost estimate: This should
first be given to you by your Agent at the time of the contract, and then given to you by the Lender, a Good Faith Estimate, shortly
after the application for the loan. This should give you a reasonably close estimate of funds you will need at
the time of closing.
Homeowners' Insurance Policy: This must
be secured prior to the date of closing. For more information on coverages (and saving money) see the Homeowners' Insurance section.
Settlement Statement: You should have
a copy of the Settlement Statement before the date of Closing. Generally this will not be available until one or
two days prior to the actual Closing, but it is important to have it because it gives you the total amount of cash
you will need at Closing and also how those various funds will be dispersed. In addition, it gives you an opportunity
to iron out any discrepancies prior to sitting down at the Closing table. Your Agent should also have a copy for
Certified Funds: On the day of Closing
you will need certified funds for closing costs and down payments. This is an important reason for needing a copy
of the Settlement Statement a day or two in advance--so you know the amount of funds needed and so that any problems
can be handled in advance.
By making adequate preparations in advance, you will be far less likely to have nasty surprises when everyone (especially
you!) is ready for closing.