Allan C. Brown Realtor®

 

 

 

 

 

 

 

 

 

 

Closing Day

It's the day you have been aiming for--you've looked at dozens of houses, found one that you love, compared mortgages, had an inspection done and made moving plans. Now its time to make that house your home--closing time. Whether known by the terms of "escrow," "settlement" or "closing" your weeks or months of effort come together in one short meeting at a closing table.

Ask most Real Estate Agents about closings and the vast majority will have stories--some horror stories, some involving 11th hour heroics and some, unfortunately, will be stories of closings that never occurred. To a large degree, though, most of these "glitches" can be avoided with a bit of planning--and monitoring of progress--prior to the closing day. Due to the number of people involved--sellers, lenders, title companies, Attorneys, Insurance Agents and others--it helps to have an effective Real Estate Agent coordinating the process. Still, the more you keep an eye on things on your own the less chance there will be of problems erupting at the last minute.

The most important components that you will need to monitor, starting from the time of contract acceptance,are:

The Purchase Contract
Loan Documents
Title Documents
Homeowners Insurance
The Purchase Contract

Most contracts for purchase have a number of provisions that can affect the closing. Possibly the two mostimportant--and subject to disputes that can delay or stop a closing--are Date of Possession and Items to Convey. It is important to clearly define in the contract exactly when possession will take place. You may not think it can happen, but stories are legend of sellers who, after the buyer has closed on their home, have no intention of vacating for days or weeks later. You've made moving arrangements, transferred the children to a new school and have utilities switched over to your name-- and nowhere to move! Remember to get the specifics in writing in the contract: "Buyer to take possession of property on Month/Date/Year." Leave no room for confusion.

Another potential closing snafu concerns items in the home that are contractually intended to remain. It can be a disheartening--and legally drawn out--situation when you arrive in your new home to find the beautiful windowtreatments and chandelier that you had agreed to in the contract are missing from the house. Make certain that thecontract states PRECISELY what is included (even if you have to designate make and model) and make sure that you do a final walk-through prior to the closing date.

Loan Documents

From the point of your loan application onward, your lender will be requesting various documentation from you. These may include letters of employment, pay stubs, declarations from you concerning prior credit problems, copies of Income Tax returns and more. You can save yourself a great deal of aggravation if you quickly get this documentation to the lender and, just as important, MAKE COPIES OF EVERYTHING YOU SEND. These documents somehow often find a way to get lost or go to the wrong person and will still be required, even if the misplacement is not your fault. Have backups ready if needed!

Title Documents

Title searches and Title Insurance are important--and necessary for closing--because they protect your (and thelender's) interest in the property. Depending on your locality, these Title Documents may be requested by the seller, yourself, or the closing Agent or Attorney. It is always a good idea to have the closing Agent notify youwhen the Title Insurance Policy is finalized so that you will be aware of any encumbrances or potential defectson the title PRIOR to the date of closing. Major title problems will stop the closing (the lender won't allow them) but minor problems (for example, a utility easement right where you planned to place a new garage) can be troublesome.

Homeowners Insurance

Casualty Insurance will be required both by your lender and by common sense. In most cases, you will be responsible for securing your own policy prior to the closing date, so it makes sense to begin your comparison process early. Be aware that although standard Homeowners Insurance policies will cover many calamities--fire, theft and vandalism—there are situations where additional policies or riders, such as flood insurance or earthquake insurance, may be required or desirable since they are otherwise not covered.

Additional Hints

Make your arrangements for a Closing Agent as soon as the contract has been approved by all parties. Closing times are often scheduled many weeks in advance, and it gives you time to co-ordinate work and moving schedules around the closing time.
Get a copy of your Settlement Statement (known as a HUD-1 form) from the Closing Agent as soon as possible--ideally, 3 or 4 days prior to closing. Not only will it give you the amount of cash you will need (in certified funds) atclosing, it will also show you complete breakdowns of fees and closing costs. Waiting until the day before closingalways turns into a mad scramble!

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