THE CLOSE

This is your last major milestone. You’ll sit down and sign all the documents and finally be given the keys to your new home. Of course you want to get this done as quickly as possible so you can get over to the new house, but not so fast! A lot of people are involved in the transaction and quite a bit of paperwork that must all be in order. The last thing you want is for there to be a problem, so take your time.

At your closing, you may come face to face with your seller, however in some areas you are allowed to have your attorney handle the closing for you. If you decide to do this, make sure you can be reached to answer any last-minute questions. 

Documents That Need Signing

In buying a home, there are two separate closings:

  1. The first set of documents that need to be signed are all the loan documents for your home mortgage.

  2. The second set of documents that you need to sign all has to do with the purchase of your property.

Loan Documents

How many documents you have to sign depends on where you live and who your lender is.

 

These are the primary ones:

 

 Deed of Trust or Mortgage : This is the document that pledges your home as collateral to secure the loan or home mortgage. The lender is, in effect, putting a “lien” on the home.

Promissory Note : This states that you promise to repay the money you are borrowing to purchase the house. It typically details the installment plan, interest rate and all the other important provisions, like what options the bank has if you do not repay the loan as agreed.

 

Monthly Payment AgreementThis letter documents the amount you will pay monthly on your mortgage. It details how much of this goes toward paying off the principal, how much for interest, insurance and taxes.

 

Truth in Lending StatementThe federal government has a mandate to require this statement. It discusses the total cost of your home loan over its life. The amount of money being financed, your interest rate as well as your annual percentage rate is all spelled out in great detail so there can be no obfuscation.

Documents for the Home Closing: 

These are the documents that must be signed before the home is yours:

Title or Warranty Deed: This is the legal description of the home and property. It also legally transfers the title. Once this document is signed the title is transferred from the seller to the buyer, which is you.

 

Abstract Title: This is a list of all the documents that have been recorded that affect title to this property.

 

HUD-1 Settlement Form: This document has an itemized list of all the closing costs, with the buyer’s and sellers’ listed separately. Before signing, verify that all the fees are listed accurately.

 

Statement of Information or Identity: The Title Company uses this document to remove any confusion that may exist between you and others who may have a similar name.

 

Declaration of Reports: This states that you have read, approved and signed all survey and inspection reports that have been completed on the property.

 

Certificate of Occupancy: If your home has never been lived in because it’s just been built, you might be given this document by the building department. It simply gives permission for buyers who have purchased a newly constructed home to move in.

What You Should Bring at Closing

  • A Cashier’s or Certified Check

If you haven’t already wired the funds to the closing company, you will need to bring a check. Make sure the amount covers your down payment plus closing costs, which will be 3% - 5% of the purchase price of your home minus your deposit. It might be a good idea to have the check made out for slightly more, just in case. Any overpayment will be refunded.

  

  • Photo ID

A current passport or driver’s license would meet this requirement.

 

  • Your Original Sales Contract

You will want this to refer to if there are any costs you are questioning or other details you want to verify.

 

  • Proof of Insurance

Your lender will insist that you have homeowner’s insurance. The closing agent must see proof that you’ve purchased a policy and that it is now in effect as of closing day.

 

  • Your Real Estate Agent

They have been with you through thick and thin on this home buying adventure, so it only makes sense that they would accompany you to the closing. Plus this is when they get paid!

 

  • Your Attorney

Just to play it safe, have your attorney there to explain all the documents before you sign them. If anything is off he/she will be there to spot it so that corrections can be made.

Again, congratulations! It’s time to celebrate with a fabulous house warming party!

Additional Questions

 

What could possibly go wrong at closing?

Because closing on a property is fairly complicated, the unexpected can happen. Here are the most common things that can go wrong: 

  • Lender does not deliver the loan documents in time

  • Errors on documents

  • Your cashier’s or certified check is somehow short

  • Title problems – an outstanding lien or some other issue

  • Last-second requests made by your lender

What do my closing costs consist of?

Here is a list of many of the closing fees that are typically the responsibility of the buyer. These can run from 1% - 3% of the home’s purchase price:

  • Application fee

  • Appraisal fee

  • Attorney fee

  • Credit report fee

  • Document preparation

  • Homeowner’s insurance

  • Inspection fee (for lender)

  • Loan discount or “points”

  • Loan origination fee

  • Mortgage insurance if required

  • Prepaid interest          

  • Property taxes

  • Recording fee

  • Title insurance

  • Title search

  • Transfer tax

What exactly is an escrow?

Escrow merely means that a third party is holding the funds for payment at a specified later date. The lender very commonly sets up an “escrow account” for the purpose of holding part of your monthly mortgage payments to pay insurance or property taxes. Those bills are automatically paid when they come due.

The other type of escrow account is when the closing agent sets up a separate escrow account. When you pay the deposit on your home, it goes into the escrow account. This money stays in escrow until all the closing costs are paid and the transaction is finalized. At that time “escrow is closed” and the excess funds will be returned to you with a statement that details how the funds were used and what you are owed.

6300 S Syracuse Way, Suite 150

Englewood, CO 80111

Phone: 303.459.6156

Email: Homes@PathHomeTeam.com

  • Facebook
  • YouTube
  • Twitter
  • Instagram