What to Expect at Closing
After searching for your dream home, or at least a suitable home in a great location, you are ready to close the deal. Your realtor probably guided you through the process of completing a comprehensive home inspection to uncover any problems, and you may have purchased homeowner’s insurance. At this point, all that is left is to close on your new home in a procedure that may be called the closing or the settlement.
It is important to allot enough time for the closing, perhaps several hours, and prepare by and bringing all the right paperwork. And of course your checkbook. It is also a good idea to schedule your closing around the third week of the month instead of the last day, just in case there are any problems you have to deal with. Closing by the end of the month can avoid much of the extra expense of prepaid interest fees.
Buyers are encouraged to do a “walk-through” of the property the day before closing, just to make sure that no damage took place on the property since you signed the contract. On closing day, bring an organized file of all related documents to speed the process along.
Who Comes to Closing
Closing is when the property ownership is officially transferred from the previous owner to you, the buyer. In New Jersey, as in most states, it is not necessary to have an attorney present at closing, although for your peace of mind you may want legal representation in case of a complicated environmental or escrow issue.
The closing meeting takes place at the closing agent’s office, whether it is a real estate attorney or a title company representative. The seller of the home will also be there, unless the seller chooses not to appear and is represented by an attorney. Beside the title company representative, a representative from the mortgage company and the seller’s real estate agent may attend.
What to Bring
Closing will move along more quickly if the participants have all the paperwork and other items they need. To expedite matters, buyers should bring along a signed copy of the contract, the inspection report and all the bank documents relating to mortgage approval. It makes sense to bring a copy of the homeowner’s insurance policy and proof of payment, although the bank will probably have seen it before granting the mortgage. Sellers should bring the keys to the house, the garage door remote and manuals for household appliances and service logs. For condos and HOA’s, sellers should bring a copy of the community rules and regulations. Both buyers and sellers should have valid photo ID’s.
The Closing Procedure
There are many steps to the closing procedure, and you may want to ask questions for clarification of any points you do not understand.
- The closing agent will review the HUD settlement sheet, and if it is acceptable, both the buyer and the seller sign.
- Next, the closing agent will require the buyer to sign loan documents including the mortgage promissory note, the mortgage and the Truth-in-Lending statement. At this point, evidence of insurance and inspections may be viewed.
- The buyer and seller submit cashiers or certified checks for closing costs and any funds that are due. The lender submits the mortgage amount.
- An escrow account is set up to receive property taxes and homeowner’s insurance, if applicable.
- Any applicable affidavits are signed, such as an affidavit stating that all repairs were made.
- The mortgage and deed are recorded at the government clerk’s office for the transfer of property. Once the deed is recorded, the buyer takes official ownership of the property.
There is a long list of closing costs that buyers are expected to pay at closing. Typically, a buyer will pay these closing costs, among others:
- Title Insurance
- Mortgage origination fee to activate the account
- Credit report
- Recording fees
- Underwriting fee
- Property tax escrow
- Interim interest
Many homebuyers are also expected to purchase mortgage insurance, and some buyers pay “points” to lower their mortgage rate of interest.