Closing Day For Your Home
There is the signing of papers and then there is the actual closing and recording, the time when you legally become the owner of your new home.
In real estate, who conducts the closing may vary from state to state, but typically when the deed is recorded in the county records, the title to the property passes from seller to buyer. This is called “closing”. It would seem a simple process, as if a single piece of paper could be handed from one person to another along with the keys to the front door!
However, during the closing phase of your transaction, there are many people involved in the process.
WHO’S WHO
When you and the seller signed the purchase agreement, you then began the closing phase of the transaction. In fact, you agreed on who would handle the closing in the contract, which in Oregon is an escrow company usually recommended by one of the real estate agents. The escrow company acts as a neutral third part, the closing agent, will take care of things from now on with the assistance of the real estate agents involved. The escrow company handles all the money, paperwork, and final recording of the deed.
The typical closing period is 30 days from the date you and the seller signed the contract. Here is some of what happens during that time:
* The escrow company will talk with the seller to obtain loan payoff amounts, receive instructions from your lender, prorate the property taxes, and prepare closing instructions for you and the seller to sign.
* The title company (associated with the escrow company) will research the ownership of the property to ensure a clean title transfer to you.
* Your lender will prepare your loan documents and send them to the escrow company for your signature.
* The seller will attend to any agreed upon repairs and will call the utility providers with a final billing date.
* You, the buyer, will complete your loan application, obtain a homeowner’s insurance policy on the property, and call the utility providers to transfer accounts to your name as of the possession date.
* The real estate agents act as coordinators, making sure the escrow company has the essentials and that the buyer and seller are in the loop so that everyone knows when to show up, what to bring, and what needs to be completed prior to closing.
* When escrow has all of the documents prepared (usually several days prior to the closing date), you will be advised as to how much money you will need to bring to closing, in the form of a cashier’s or certified check from your bank (payable to the escrow company).
THE CLOSING
When the escrow company is satisfied that everything is in order and all instructions are prepared, it’s time for “closing”.
Most often, the buyer and seller will never see each other. You and your real estate agent will meet separately with the escrow officer.
WHAT TO BRING TO CLOSING
§ A certified or cashier’s check. This payment will include your down payment and your share of the closing costs (loan fees, property taxes, etc.)
§ Photo ID. The escrow officer will be notarizing your signature on the documents and needs to verify that you are who you say you are. A driver’s license or current passport will suffice.
§ Your real estate agent. Especially if you are a first-time buyer, you should have someone with you who understands the process and represents your interest.
§ Your records of the transaction, just in case you need to double-check a detail.
THE DOCUMENTS
You will be signing documents related to the loan you have obtained on the property, as well as escrow instructions related to the transaction.
The documents related to your loan may include:
§ Promissory Note - your promise to repay the amount you are borrowing. This is important so be sure to check it over.
§ Truth in Lending Statement - this is a document required by the federal government that outlines the interest rate you will be paying, the annual percentage interest rate, the total amount being financed and the total cost of the loan over its lifetime.
§ Mortgage Deed of Trust. This document puts our home up as security for the debt you now owe. Technically, the lender puts a lien on the property and it cannot be sold without payment of the loan.
§ Monthly Payment Instructions - This breaks down your monthly mortgage payment, showing how much goes to principal, interest, taxes, and insurance.
§ HUD-1 Settlement Form - this form is the government-required statement of all settlement fees paid. It itemizes the buyers and sellers closing costs separately.
Some other forms you may be asked to sign
* Warranty Deed - this document transfers title from seller to buyer. It contains the legal description of the property. This is signed by the seller, however the buyer will often be asked to initial that they have seen a copy.
* Escrow Instructions - this document is your authorization for the escrow company to prorate taxes, interest, and any HOA dues, and to collect fees for the lender and any other closing costs associated with the transaction, including the escrow fee.
* Statement of Identity - this is used to confirm your social security number and eliminates any confusion between you and someone with a similar name.
* Title Report - you should have received a Preliminary Title Report earlier, listing liens against the property. You will be provided proof that these liens have been removed and that the escrow company is prepared to transfer clean title to you.
BUYERS TIPS FOR “CLOSING MEETING”
* Allow plenty of time. This is not a quick lunch hour errand - plan on about an hour.
* Ask your realtor to attend with you, especially if you are a first-time buyer.
* Read all paperwork before signing and don’t feel intimidated about asking questions. The escrow officer’s job is to make sure you understand what you are signing.
* Go celebrate the purchase of your new home!!