If you’ve entered into a contract to purchase a home, your transaction won’t be final until closing. Most buyers have many questions about the process, including:
What is closing? Closing (also called settlement) is the legal transfer of property ownership. Usually, but not always, possession is transferred at closing. Sometimes the seller may ask to close the sale but retain possession, and pay rent to the buyer until vacating the property at a later date.
Who attends closing? Face-to-face closing are common in most states, although a few states do not require them. Your buyer’s representative can provide details for your situation. The participants usually include:
– You, the buyer
– The seller
– The real estate agents representing the buyer(s) and seller(s)
– Attorneys for the buyer(s) and seller(s)
– The closing agent, the title insurance representative, and the escrow agent. Often one person fulfills all three roles, coordinating and recording the exchange of the documents and money, disbursing funds, and handling various closing details
Where is closing held? Closings are usually held at a title company’s office. Their job is to confirm the current legal owner of the property, reveal any mortgages, liens, judgments or unpaid taxes on the property, and identify any restrictions that may affect the sale of the property. Any problems need to be corrected before a buyer can receive “good title.”
What do I need to bring? Your buyer’s rep can advise you on what you’ll need to bring to closing, but typically buyers must provide:
– Payment of closing costs
– Proof of insurance
– Approval of inspections of the property
What happens at closing? You’ll sign many documents. Rely on your buyer’s rep and your attorney to review these documents and answer any questions you may have. Frequently-used documents include:
Closing Disclosure statement – details all funds changing hands between the buyer and seller
Truth in Lending statement – a final summary of the terms of your loan
Mortgage note – a legal obligation to repay the lender according to stated terms
Deed of trust – the legal transfer of ownership; gives the lender a claim against your home if you fail to meet the terms of the mortgage note
Affidavits – any binding statements by the buyer or seller
Riders – any contract amendments that impact your rights
Any additional documents required in your state
Once all documents are signed and all monies have been paid, possession is transferred and you receive the keys to your new home. Be sure to keep your closing documents in a safe place for future reference. Some of the expenses associated with your home purchase are tax-deductible.
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