Timing is everything when scheduling a transaction to close.
If you’re renting, you may want to schedule the closing around the time that
your lease ends. If you plan to do work on your new home, choose a date a month
or two down the line before you leave your rental. If you’re moving out of a
house that you’re selling, you will need to juggle between two closing dates.
Schedule the closings in the correct order, since many people need the cash
from the first home to pay for the second home. When considering your mortgage,
make sure the closing date is set before your interest rate expires. If you
plan to move the day you close, be sure to schedule the paperwork as early in
the day as you can. This will save time and headache.
Many closings are categorized into two closings: the closing
of the purchase of your home, and the closing of the mortgage loan to buy the
real estate. Your lending statement or “Regulation Z” is important because it
discloses your interest rate, annual percentage rate, the amount that is being
financed and the total cost of the loan over its lifetime. Be sure to check and
double check the numbers before signing. Expect a Monthly Payment Letter, which
reveals the breakdown of your month payments, interest, taxes, insurance, and
escrow fees. The Note, where you are actually borrowing money and giving your
personal guarantee that you are going to pay it back, is extremely important in double checking. Be sure everything adds up
before signing this. And finally, the
mortgage, where it’s a lien on the house as security for the loan allows the
bank to foreclose if you default on the note mentioned above. Take deep
breathes when signing these two forms.
Now there are the real estate documents that make the house
yours. There’s quite a few forms here, so be patient. The first form is the
HUD, which contains all the settlement costs and amounts. The closing agent
will go over this with the buyer and seller. Pay great attention to this form
and read it all over carefully. The Warranty Deed is the document that is brought to everyone’s attention. It includes
the name of the buyer, seller, and the description of the property. It
guarantees that the seller has the right to sell the property and transfers the
title of the property. Next is the Proration Agreement, where it describes how
you and the seller are dividing up the costs of the house for the month in
which it is being purchased. The seller may have already paid property taxes,
for example, and so the buyer needs to reimburse the seller for the taxes that
covers the time after the buyer takes over the property. The next few documents
are the tax and utility receipts, where you sign city and state receipts that
it has been paid by the seller or will be paid by the buyer, and the Name
affidavit, basically clarifying that you are you say you are. Lastly is the
Abstract of Title, which just shows you a record of the property’s history.
The closing date is the day you hand over the money, so be
sure you have the correct amount and check in hand when you go into the day of
closing. Expect to pay closing costs, which are a portion of the costs that
vary from state to state and are usually negotiable. You’re also paying for the
down payment (if any) of the home at this time, and giving it to the closing
agent along with the lenders check for the balance. And finally, escrow fees,
where often times the buyers annual taxes and insurance are paid through the
lender.
Smile. Deep Breath. Go get your keys!
A Closing may be the end of the house and buying process, but it’s the opening
curtain on your new life as a homeowner.
Your Local
Agent,
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