A closing, or settlement, is the meeting during which ownership of the property is officially transferred from the seller to the buyer. The closing may involve settling any open issues, balancing and verifying an often-complex closing statement and signing all documents necessary to complete the transaction. An attorney with experience in closing real estate transactions will advise you at closing to ensure that your rights are protected.
Closing Costs
Closing costs are one of the least-understood aspects of the home purchase procedure. Although a good closer will take time to walk a buyer through the numbers, an experienced attorney will provide additional insight and verify that the costs are being appropriately allocated between the buyer and the seller.
Closing costs vary somewhat by community, but they generally are between two and five percent of the home’s purchase price and include:
- Attorneys fees
- Escrow fees
- Property taxes to cover the period to the closing date
- Interest from the closing date to one month before the first monthly payment
- Loan origination fees
- Recording fees
- Survey fees
- Mortgage insurance, if applicable
- Title insurance premiums, both for the buyer and the lender policies
- Loan discount points
- The first escrow payment for future real estate taxes and insurance
- Homeowner’s insurance policy payment or receipt
- Appraisal fees
- Pest or other specific inspection fees
What Happens at Closing?
At closing, the buyer typically presents his or her paid homeowner’s insurance policy or a binder and receipt showing a paid premium. The closing agent will then list the amounts the buyer owes the seller and the amounts the seller owes the buyer. These are called prorations. The seller will provide any items the contract requires him or her to provide. Once the parties have verified that the numbers are correct, the parties sign the closing statement, the buyer signs the mortgage note and the mortgage, and the seller gives the buyer title to the property in the form of a signed deed, which is then recorded with the County Recorder of Deeds office.
The buyer often pays the lender’s agent all closing costs, and the closer provides the buyer with a settlement statement listing all the monetary items. Immediately after closing, the title company should record the deed and mortgage.
Documents the Buyer Receives
The buyer typically signs:
- Settlement statement, itemizing the services provided and the fees charged
- Truth-in-lending statement
- Promissory note or loan agreement
- Mortgage or deed of trust
- Sales contract amendments, if any
- Any required affidavits
- Copy of the deed (the original to be returned to Buyer, after its recording)
- Keys or access codes to the home and garage
Speak to a Real Estate Lawyer
A closing can be stressful, with both parties discussing and sometimes disagreeing about the numbers or other issues. An attorney who is knowledgeable in real estate law can help you protect your rights during this time.
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