House Closing

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Home Sale Closing

Sealing the deal at home closing.

Once a mortgage is obtained and all the other contingencies in the real estate purchase contract are satisfied, ownership of the home will be transferred at what's commonly referred to as a closing. In some areas of the country, both buyer and seller attend the closing, while in other communities each side meets separately with an employee of the lender or title company to complete the deal.

At the closing, all the final financial details of the purchase will be taken care of. The buyer will give his check for the down payment, and the lender will provide a check for the balance of the purchase price.

The buyer will also be required to pay additional expenses, known as "closing costs," or "settlement costs." In most cases, these costs represent a significant amount of money above and beyond the down payment. These costs typically include the cost of obtaining a credit report, a survey and a property appraisal, the title insurance premium, as well as recording fees and attorney fees if a lawyer's services were used. You'll also have to pay the premium for a homeowners' insurance policy before the lender will hand over its check, since it wants to make sure there will be money to pay off the mortgage or rebuild the property in case of a fire or other damage.

If the seller has paid all his taxes for the year, he's entitled to repayment of the portion that covers the time the new buyer will own the house. So, for example, if the annual real estate taxes of $2,000 were paid on January 1, and the house is sold on October 1, the buyer must reimburse the seller $500. And the seller is also entitled to a refund for any utility payments he made that actually cover the time you own the house.

Under federal law, when you apply for a home mortgage, your lender must provide you with a good faith estimate of the closing costs you'll encounter within three days of receiving your application. It must also give you a copy of the booklet entitled "You and Settlement Costs" at the same time. And it must give you a copy of the actual closing statement at least one day in advance of the closing, so you'll know exactly how much money you will need to bring to the table to close the sale. In most cases, you will be expected to bring a certified check to pay for these expenses.

As the closing continues, the title insurance policy will be presented for inspection and compared to the description of the property in the deed provided by the seller, to be sure that all known defects and encumbrances are accounted for, and to be certain that the property covered by the policy is the same as that described in the deed.

The buyer will also have a chance to examine the deed, as will the lender, to assure themselves that everything is in order. If the buyer and lender are satisfied that the deed is correct, the seller will sign the deed over to the buyer. Remember that if the seller is married, the spouse should also sign the deed, even if he or she isn't named as an owner of the property, in order to prevent possible future claims to the property.

If the home being sold is one that's newly constructed, the seller will provide a "certificate of occupancy." This document is issued by the local building inspectors, and declares that the building conforms to all local codes in effect at the time it was built. The seller will also provide any warranties for the foundation or other elements of the home at this time.

Once everyone is satisfied that all the documents are in order, the seller gets his money (minus any money he owes to his own mortgage lender) and the buyer gets the keys to the property. But before moving in, there's one more step that needs to take place to protect the buyer's interest in the property.

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