After all the home searching, negotiations, inspections, mortgage paperwork….. are done, you are now ready to close on your home – also known as the settlement or closing escrow. In general this is the process which passes ownership of a property from seller to buyer.
What is involved in the Closing, Settlement or Escrow?
This is the proverbial “signing on the dotted line”, the process in which the title of the home goes under your name, the homeowners insurance is verified, you commit in writing to the terms of the home mortgage, and after the funding takes place, you are handed the keys to your new home.
The location of the closing varies; it can take place at the title insurance company, attorney’s office, or real estate agents office.
In general the Buyer and Seller and their respective Realtors will attend the closing in case any last minute changes or negotiations need to take place. There will also a representative or closing agent who has reviewed all the documents for the sale and purchase and who will be the person who says “sign here” more times than you want to hear.
What Forms are involved in a closing?
There are several forms and paperwork involved when closing escrow. Here are a few
- The Settlement Statement – known as HUD1 – This form shows provides a breakdown of how all the funds are being disbursed. As your representative we will make sure you receive this paperwork a few days before closing for your review.
- The Contract – Since the purchase and sale contract has controlled and provided guidance as to how the purchase is to take place, this piece of document is part of your closing package.
- The Loan Papers – If you are mortgaging the home with a loan, then all the home loan documents are waiting here for you to sign them.
- Title Insurance – Is indemnity insurance against financial loss from defects in title to real property and from the invalidity or un-enforceability of mortgage liens. Title insurance is principally a product sold as a result of the comparative deficiency of the US land records laws. It is meant to protect an owner’s or a lender’s financial interest in real property against loss due to title defects, liens or other matters. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy.
- Homeowners’ Insurance – Unless you pay cash for your home, your lender will require proof of a valid homeowners insurance policy, secured before closing. This policy will protect both your investment as well as the lender’s.
- The Title or Deed – A deed is the document that transfers ownership of real estate. It contains the names of the old and new owners and a legal description of the property, and is signed by the person transferring the property. Since this has to be recorded with the local registry, it will normally be mailed to you days after the closing.
- Bill of Sale – This is just what is sounds like, a bill of sale. It describes the real property that is being transferred, form whom to whom, and some other legal verbage that is used.
What you will need to bring to the closing of your home
- Driver license or other form of verifying your identity.
- Any receipts you may have for any of the necessary items that were paid in advance; such as – HomeOwners insurance, inspections, appraisals, credit reports…..
- Certified funds – Any funds that you might have to bring to closing to secure the purchase, will have to be in the form of certified funds (cashier checks, money orders – No Checks!).
- Any additional documents required beforehand by your lender.
As your Real Estate agents, we will ensure your closing is smooth as can be. Don’t Forget the Keys!
