Step 7: Close on your home.
The closing is the last step in the process of buying your home. “Closing” refers to the transaction during which you close your deal with the seller to buy a home at the same time that you close your deal with your lender to borrow a loan.
Conduct a final walk-through of the home before the closing.
Usually, the final walk through is conducted with your Realtor, the evening or morning of your schedule closing. This final walk though is like a last inspection to ensure that the home is in acceptable, move-in condition. This is important because, once you close on the property, you will lose any legal recourse against the seller for a condition that you did not previously discover. Come to the closing prepared.
Your attorney will provide you with detailed information about what you must bring to the closing. In general, you will be required to bring two forms of identification as well as a certified cashier’s check to cover the exact amount of the closing costs you have agreed to pay. (Who pays closing costs can be a subject of negotiation with the seller. Talk to your agent about this.)
This is the step in the home buying process when your attorney’s expertise is particularly relevant. Make sure you ask your attorney any questions that occur to you before the closing. Come to the closing prepared to carefully read and sign closing documents and do not hesitate to ask more questions during the closing. It is vital that you understand all documents before you sign them.
Familiarizing yourself ahead of time with some of the mortgage and real estate documents that are likely to be included in your closing will minimize the potential for surprises and confusion.
Some or all of the following documents related to your home loan will be presented to you at your closing:
•Truth in lending statement lists the interest rate, annual percentage rate, amount financed and the total cost of the home loan over its life.
•Itemization of amount financed summarizes the finance costs of the loan.
•Monthly payment letter breaks down your monthly payment into principal, interest, taxes and insurance.
•Mortgage puts a lien on the house as security for the loan, which allows the bank to foreclose if you default.
Some or all of the following real estate documents connected with the sale of the home will be presented to you at your closing:
•Settlement Statement contains all settlement costs and amounts.
•Warranty deed guarantees that the seller has the right to sell the property and is signed by the seller and the buyer to transfer title of the property.
•Proration agreements describe how you and the seller will divide the costs associated with the home for the current month. These costs could include property taxes or condo association fees.
•Name affidavit certifies that you are who you say you are.
•Acknowledgment of reports signifies that you have seen all of the reports regarding the property, including surveys and inspections.
•Search or Abstract of Title lists the documentary history of the property including all titles and all liens. This document ensures you that the seller has clear title to the property and that there are no claims against the property by other parties.
Take the keys and move into your new home.
At the loan closing, the title of the home will be transferred from the seller to you. Also, the mortgage agreement between you and your lender will be finalized, which will enable you to pay the seller with the proceeds of the loan at the same time you receive title to your new home. Your attorney will ensure that payment is made on your behalf at the closing.
The closing often takes place in the office of the buyer’s attorney but can take place at any mutually agreed upon location. You can expect multiple participants at the closing. Besides yourself, among those present will be the seller and his attorney, the real estate agents and/or brokers, your attorney and the lender’s attorney.
At the closing, your lender will give you a mortgage payment schedule which will include payment instructions. At the end of closing, you will leave with a folder full of paperwork and a set of house keys (or two!).
Congratulations; you are now officially a homeowner!