The Big Day!
The big day is here! Tonight
you can pop open the champagne, but today there will be a lot of paper
signing and a poignant passing of the keys (don't forget the garage keys,
and electric door opener, too).
At the settlement will be an attorney
or title company representative (chosen by the buyers), all buyers, listing
and selling brokers and all owners. The home seller should bring all warranties
on equipment and any instructions on equipment maintenance or operation.
The attorney will have searched the
title, provided title insurance and obtained old and new lender instructions.
First, all unresolved walk-through deficiencies are resolved.
With the buyer, the attorney explains
the deed of trust or mortgage; the deed of trust note or mortgage note;
VA, FHA or lender forms; and settlement sheets. Buyer signs all these and
pays the balance of the down payment and buyer's closing costs with cashier
or certified check.
Open Look
At Closing Costs
"Closing costs" have lost much of their
mystery in recent years.
Under the Real Estate Settlement Procedure
Act, the home buyer is furnished an estimate of closing costs by the lender,
in advance of the closing. In some cases some of the closing costs may
be paid by the seller; this is particularly true for new housing, where
the seller is the builder.
Settlement fees vary widely depending
on price location and other factors but overall the buyer's costs usually
average between 3% and 7% of the sales price. Items that are usually included
in the settlement fees are the loan origination fee, mortgage insurance
premium, attorney fees, owner and lender title insurance, recording fees,
county tax stamps, state tax stamps and the survey fee. In addition the
lender will require an appraisal fee and a credit report fee in advance
of the closing.
A few other items, not required to
be listed under the law, may also have to be paid at a closing. These include
advance deposits held in escrow for real estate property taxes and insurance.
The lender collects a portion of these every month and then pays the insurance
and taxes when they are due.
Because specific closing costs vary
from area to area, and transaction to transaction, we encourage you to
consult with us to determine your exact charges. Sometimes closing costs
can amount to a sizable sum, but remember some of the items are tax deductible.
The loan origination fee prepaid interest and property tax adjustments
may be such items.
Signing On
The Dotted Line
With the seller, the attorney explains
the settlement sheets and gets the home seller's signature on them and
the deed. Seller pays appropriate closing costs.
If the seller's taxes or insurance
have been escrowed, the seller will receive any money accumulated in the
account for bills not yet due. Additionally the seller will be reimbursed
for any money paid in advance and not used such as property taxes. The
seller will receive these refunds at or after settlement, depending on
the area. Taxes and home owner's dues or condominium fees will be prorated
on a daily basis. Seller, buyer and brokers are supplied a copy of settlement
sheets for their records.
The house keys are passed. You are
now the proud owner. Congratulations!
Next - Financing
