It is an important milestone in any real estate transaction since all parties involved sign the legal documents that officially transfer ownership of the home from the seller to the buyer. During closing, the closing agent will review each document in detail and explain the details of each document. This ensures that everyone is in agreement with the terms of the sale.
The closing process begins when the buyer’s loan has been approved and the title search is complete. Although the exact documents vary based on the state and type of loan, the majority of closing documents include the following:
-Truth in Lending Statement: This document discloses the annual percentage rate (APR) of the loan, the total amount of finance charges, points and fees associated with the loan, and an itemization of these charges.
-Mortgage or deed of trust: Depending on the state, this document secures the loan and pledges the property to the lender as collateral should the buyer default on their loan.
-Note: This document is the borrower’s promise to repay the loan in accordance with the terms stated in the document.
-Settlement statement: This documents outlines all the credits and debits associated with the sale.
-Deeds: Depending on the state, both the buyer and seller will sign one or more deeds which convey ownership of the property.
-Tax statements: The buyer and seller usually exchange tax statements, which document the amount of taxes paid on the property.
-Homeowner’s insurance policy: This specifies the type and amount of insurance coverage for the property.
At closing, it is important for the seller to be aware of any financing arrangements that have not yet been finalized. It is also important to make sure that the buyer has sufficient funds to cover their closing costs. The closing agent will provide a Good Faith Estimate (GFE) which outlines all the expenses associated with the purchase of the home.
After all documents have been signed and payment has been received, the closing agent will record the deed and mortgage with the county clerk or recorder. Once the deed has been recorded with the county, ownership has officially been transferred to the new owner.
Closing is the final step in the real estate transaction process and it is an important milestone for both the buyer and seller of a property. At this time, the legal documents that officially transfer ownership of the home from the seller to the buyer are signed. The closing process typically begins when the buyer's loan has been approved and the title search is complete, and ends with the recording of the deed and mortgage with the county clerk or recorder. During the closing process, the closing agent will review each document in detail and explain the details to all parties involved. The documents commonly signed during closing include Truth in Lending Statements, mortgage or deed of trust, notes, settlement statements, deeds, tax statements, and homeowner’s insurance policies. It is important for the seller to be aware of any financing arrangements that have not yet been finalized and for the buyer to have sufficient funds to cover their closing costs. Once all documents have been signed and payment has been received, the deed officially transfers ownership to the new owner.
This article was contributed on Nov 25, 2023