The closing is when the sale of the property is officially completed. The closing location and time will have been previously agreed upon by all the parties involved. There is paperwork that both the seller and the buyer will have to sign at the closing. Don't be afraid to ask your closing or real estate agent about any documents you don't understand. You have the right to know what you're signing.
Once the day and time is set, there are a few items that you will need to remember to bring to closing.
Driver's license or ID to have proof of who you are. The closing agent will collect your ID and make a copy for their records. In the event you do not have your ID, you may not be able to close.
The buyer will have to also bring either a cashier's check to pay for their closing costs and down payment or have wired the money directly to the closing company prior to closing. Each closing can be different depending on who the closing company is.
A checkbook for any small miscellaneous fees that may have been missed. Typically your large cash-to-close amount will be taken care of prior to the closing date in the form of a wire transfer or a cashier's check as mentioned previously. However in the event that a small amount was missed it is a good idea to bring your checkbook.
Quick Disclaimer. Wire Fraud is Real. Before wiring any money, call the intended recipient at a number you know is valid to confirm the instructions to close. Unfortunately, there are scammers out there that will send fraudulent instructions in an attempt to steal your money for closing. Confirming the accuracy of the wiring instructions can save a large headache.
The day is here and it is time to close on your home! Try to show up early to your appointment and be sure to check in and let them know who you are and the property address. The closing agent will greet you and escort you to a conference area in which the closing will take place. One of the first documents you will see and review is the closing statement. The closing statement is a complete summary of all the numbers in the transaction including real estate, title, lender, and possibly other miscellaneous fees.
Some of the most common real estate costs at closing are property tax proration, county conveyance fee, real estate commission, and deed preparation. Property tax proration is the process in which the seller pays to the buyer a prorated amount of money to the buyer to cover all property taxes that the seller is responsible for prior to closing the transaction and the actual tax bill being due. The county conveyance fee varies between 1 to 4 dollars per thousand of the purchase price. Real Estate Commission is the fee that is formally agreed upon prior to contract acceptance for services rendered by a real estate brokerage. The deed is the document that conveys the ownership of the property to the new buyer and is prepared by an attorney and signed by the seller.
Fees associated with the title process are a settlement fee, title search, closing protection coverage, lender fees, and title insurance. Settlement fees are the fees paid to the title agent for document and closing statement preparation and recording of legal documents. A title search fee covers the inspection of public documents relating to the title of the property to check for any issues. By law, the settlement agent must provide you with a Notice of Closing Protection Coverage. This coverage generally protects you and/or the lender, but only if you purchase coverage, in the unlikely event the settlement agent disburses your funds in an inappropriate manner causing a loss to you or to your lender.
Lender fees may include a loan origination fee, an appraisal fee, a flood plain certification fee, and a credit report fee, to name a few. Some or all of these lender fees or closing costs can be negotiated in terms of who pays them, the seller or buyer. This negotiation of fees should only be at the time of negotiating the original purchase agreement not at the closing table. The buyer should check with their lender for the actual lender fees or closing costs associated with their loan and also if there is a limit to which the seller can pay.
On closing day, expect to sign a lot of documents and walk away with a big stack of papers. Here is a list of the most important documents you should file away for future reference.
Closing or settlement statement. The closing or settlement statement Itemizes all the costs - commissions, loan fees, points, and hazard insurance - associated with the closing. You will need it for income tax purposes. Closing Disclosure. The closing disclosure summarizes the terms of your mortgage payment, loan terms, fees, and cost of the mortgage. Mortgage and Note. Your mortgage and note spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms. Deed. The deed transfers ownership to you. A copy of the deed may not be available immediately at closing as it should be recorded to become effective. The deed is either mailed to you or will be available to pick up after it is on record. Affidavits. Affidavits are binding statements by either party. For example, the seller will often sign an affidavit stating that they have not incurred any new liens recently. Insurance Policies. The closing company or your insurance agent should provide a record and proof of your coverage.
You remembered your ID, arranged for the cash to close, and showed up early to your closing. The number. of the transaction has been reviewed and approved by everyone involved. Take a deep breath and relax as the transaction is complete. Congrats on your real estate sale or purchase!