Closing on a house is the final step to getting those coveted keys. What exactly happens at a real estate closing and what should you be expecting? Well its nearly a given that all buyers will walk away from a closing with cramped hands from signing so many documents. Nonetheless, those pieces of paper are important make sure you know what youre looking at from the get-go.
Did you know that buying a house is among the most stressful situations in anyone's life? It ranks up there with death, marriage and taxes! Its perfectly normal to experience some anxiety about your house closing, so its good to go in with a decent nights sleep behind you and a clear head.
Timing:
There are some things you can do to make your closing a much smoother transaction. For one thing really think about the timing, particularly if youre a renter. Breaking a lease can cost you money so your closing should be timed to coincide with the end of your lease. If youre moving from another home thats even more difficult (you have two closings to handle). In this case you should close your current home before the new one so that any residual capital is available to you.
Two other points in scheduling are your lenders mortgage commitment and your work schedule. Lenders have a lock in date for your loan. After that date, the interest rate offered can change. So you want to close before that date passes. In terms of work, really just take the day off when youre going to a closing. While the whole process may not take more than an hour or so, by the end of it youll feel like you ran through the concrete jungle at full tilt.
Documentation:
As mentioned, closing on your house comes with a plethora of documents. Here is what you can expect to sign (and sign, and sign):
* Acknowledgement of Reports: This is where you certify that youve seen all the documents available about the property (like a survey).
* HUD Form 1: This breaks out all your settlement costs. Read this for any potential errors (youll be hearing that advice a lot; bring those reading glasses).
* Itemization of Amount Financed: This is similar to a Truth in Lending statement but includes other details like any points youre paying upfront.
* Monthly payment letter: This shows you what youll be paying each month when everything taxes, insurance, and escrow are bundled together
* Mortgage: This gives your bank a lien on the house, meaning if youre a bad borrower and dont pay they can foreclose.
* Name Affidavit: Are you who you say you are? Check your drivers license.
* Note: This guarantees the bank that youll pay back your loan (try not to swoon over all those zeros).
* Pro-ration agreement: Its unlikely that youre buying a house on the first of the month. The pro-ration agreement details how much you are paying for that first month of ownership based on how much in taxes the seller has already paid, homeowner association fees etc.
* Regulation Z (Truth in Lending Statement): This specifies your interest rate as well as the total loan cost. Review the figures and make sure theyre correct based on your lenders lock in.
* Search (Abstract of Title): On older homes these can be somewhat interesting because it lists every person who owned the house before you along with any other public records about the parcel.
* Warranty Deed: This document has the name of the seller, buyer and a property description. It also guarantees that the seller can actually legally
At the end of all this bro-ha-ha, the house closing isnt complete until you provide a certified check for a specific amount. This check represents the sum of escrow, closing costs and down payment. Ready? Set? Thats it. Youre a home owner and the keys to the kingdom are yours.
