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The real estate Closing is the final stage in the process of buying your new home. The closing is a meeting where the buyer, seller, realtors representing both buyer and seller and some occassion your loan officer and the title or escrow company come together to help complete the sale. At this meeting, the parties review the closing documents, which usually includes the loan papers, title documents, and related transfer documentation.
The buyer usually signs all of the closing and loan papers, makes any required payments for closing costs and receive the title documents. The title company or escrow company will ensure that all of the necessary funds are paid to the appropriate parties, lenders and the sellers.
The lender funds the buyers’ loan, the sellers’ loans on the property are paid through escrow and the closing costs are paid as well. The sellers receive their ‘net’ proceeds and the Closing is completed. The buyers receive copies of all of the documents necessary for the transfer of of the sale, title and receives a copy of the deed that transfers the title to the buyer; as well as any termite contracts or bonds, home warranty contracts and builder’s warranty papers if applicable.
All of the necessary documents, such as the deed, are recorded at the appropriate government office, usually the probate court or county recorder’s office. After the closing, the buyer will receive papers from their lender with instructions for future payments of the new home loan. You will also receive property tax information which will be necessary to ensure your property taxes are paid on time, as most taxing authorities can take up to one (1) year to up-date their records and properly assess and tax your new home under your name. Regardless of what name appears on the tax rolls, you need to pay your property taxes on time or you could be charged a late fee or other penalties.
Sometimes lender will require ‘impounds’, which are additional monies you will pay each month along with your regular principal and interest payments on your new loan. These impounds are usually for property taxes and insurance. Instead of the lender having you pay these homeowner expenses once a year, the lender requires that you pay a pro-rata portion of the estimated taxes and insurance each month to the bank and then, as required, the lender pays these items, thereby ensuring they are paid on time and in full. If your new loan has impounds, make sure that the related expenses, such as taxes and insurance, are paid in a timely fashion by your lender. Most likely, you will get a written notice of payment of these expenses; but if you do not, follow-up with your lender or loan agent and confirm the payment for any impound expenses. It’s your money so do not be shy about making sure the bank or its servicing agent is doing their job – their being paid to do it, so make sure they are!
All of the closing documents, warranty papers, title insurance, escrow papers and loan documents should be stored in a safe place for future reference or review. At tax time, these papers will be important for your accountant or tax professional to review and consider when you file your tax return.
The Closing can be an exciting, scary, and fun time of your life…your new home, new challenges and responsibilities. Remember there are a lot of people to help you through this process – your real estate agent, lawyer, accountant, lender representatives, title and escrow officers. Use these valuable resources and, most of all, enjoy your new Home!
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