- Steps For A Successful Home Closing
The cliché that Buying a Home is the Single Biggest Investment a Person Will Ever Make in their Life is really true. To make the process as smooth and trouble-free as possible and to avoid unpleasant and potentially costly problems after your closing, you need to be involved in and pay attention to the details of your home purchase. Of course you should rely upon the expertise, guidance and advice from your Real Estate Professional, your Mortgage Loan Professionals and your Title Professionals. But it still requires your attention and involvement. It’s not just signing a bunch of papers that do not matter. Most of them have significance. Take time prior to and at the closing and make certain that the important paper work reflects your understanding of the transaction. Here are nine important matters that you should pay special attention to at your closing–and beyond.
1. At least several days before the closing, ask to review the title insurance commitment.
The commitment to insure is almost always prepared within a week or less of the order placement with the title company, which one of the realtors or the mortgage company will do. The commitment shows who owns the property now, lists the required documents to transfer ownership to you, other matters to be cleared, if any, before closing, and in Schedule B-Section II, shows all of the recorded property rights the title company found that will take precedence over your ownership. These usually include utility easements, restrictions and other routine matters. These are property rights that might affect your plans for the property. For example, there might an easement area on the property right where you’re thinking you want to build a pool or outbuilding. Reviewing the title commitment helps you understand the legal nature what you’re buying and feel free to ask questions.
2. At least several days before closing, talk to your realtor, loan officer and title company contact about your closing and what to expect. Ask questions, and be informed about the process.
3. Make time in your schedule to be at the closing.
As mentioned, the home purchase may be the biggest financial transaction in which you ever participate. Everyone is busy, and no one wants to miss work, but this is very important. Allow yourself the opportunity to clearly understand all of the details and financial commitments that take place. It is difficult to know what is going on, particularly last minute changes, when someone is trying to explain it to you over the phone, rather than in person. Bring any estimates that your lender provided you to the closing so that you can refer to them. Consider making arrangements to come to the closing an hour early so that you can thoroughly review all the documents. Mobile closers are available in most instances, Powers of Attorney can be used for those who cannot attend and remote “mail-away” closings before a notary can be arranged, but there is no substitute for a personal appearance.
4. Make sure that you understand all of the charges and credits on the closing statement, especially the real estate taxes.
The taxes will be handled in a variety of ways depending upon the time of year and the terms of your Purchase Agreement. The seller’s obligation for taxes usually ceases at closing, so ask the closing agent explain to you how payments and credits are being handled. And there is further information on this website to explain the settlement statement.
5. Make certain that the interest rate and term in the Promissory Note to the lender are what you expected.
Check the adjustment dates and index if your loan is adjustable. You will be provided a payment letter which details not only the principal and interest owed each month, but also any additional amounts the lender requires for tax and insurance escrows (further information on this website). It will also show your first payment date.
6. Review the seller’s deed to you.
Make sure your name(s) are spelled correctly and that the deed vests title in the manner you want – tenants by the entireties (husband and wife), tenants in common or joint tenancy with rights of survivorship. Ask for these terms to be explained if you do not know. The title company cannot practice law and give advice, but its representative can explain what each form of ownership means. Each has different legal significance.
7. Make sure you review the survey to understand the location of easements, fences, possible encroachments, etc. Keep your survey copy in a safe place; having a copy may save you money if you sell or refinance later.
8. A couple of weeks after your closing, file with the County Tax Assessor for any real estate tax exemptions such as homestead that you’re eligible for. Failure to file can result in significantly higher property taxes.
9. A few weeks after closing you will receive your Owners Title Insurance Policy and recorded deed from Mason Title.
Keep these documents in a safe place. The title policy, in addition to providing you the insurance protection as stated therein, may provide you with a significant premium discount if you refinance or sell.
If you pay attention to the details about your purchase and take responsibility for understanding them, you’ll be much more likely to avoid unpleasant surprises after the closing – surprises that can be difficult or impossible to change.
- Items Buyer Brings to Closing
- Identification at least one government pictured id, like a driver’s license
- Original Powers-of-Attorney to be used at closing (must be pre-approved by lender and Mason Title)
- Collected funds for any money due in the form of a wire transfer, or bank check, cashiers check, certified check. Wire transfers are preferred, as the checks have disadvantages to both buyer and Mason Title (see discussion on this website) EBT transactions-transfers directly from Buyers Account at the same Bank where Mason Title maintains its escrow account is discouraged, because verification of the fund transfer to Mason’s Account will not occur until the next business day.
- Original homeowner’s insurance policy with paid receipt showing coverage fulfilling lender requirements (without a paid receipt the premium will be collected at closing)
- Invoices to be paid at closing (must be pre-approved by lender)
- Other original documents required by lender including, but not limited to, proof of sale of previous residence, pay stubs, gift letter, etc.
- Checkbook to pay for items not included in estimates given prior to closing (typically $100.00 or less.)
- Documents Typically Signed By Buyer At Closing
Closing, or settlement, is the completion of the real estate transaction. The parties gather at the title company office, together or separately, or before a notary if closed remotely, to execute all required documents and deliver all required funds. The buyer and seller, if applicable, remit any remaining funds due, as does the realtor if holding the Earnest Money Deposit, and of course the lender transmits the loan funds if there is to be a mortgage. The settlement agent disburses funds as set out on the HUD-1 Settlement Statement.
This is list of the documents that a buyer signs at a typical closing where the buyer where mortgage loan financing has been secured: Items paid outside closing for the closing are so marked as POC:
- HUD-1 Settlement Statement: sets out all receipts and disbursements made by, on behalf of, or to the buyer and seller in the transaction.
- Promissory Note: outlines the material terms of the loan including interest rate, term, maturity date, principal and interest payment amount, late penalty and prepayment penalty. There may be more than one if there is secondary financing for the purchase
- Mortgage: secures the property as collateral for the loan. There may be more than one if there is secondary financing for the purchase.
- Disclosures and Acknowledgements: Where applicable, borrower may sign the following disclosures and acknowledgements:
- Disclosure of the Annual Percentage Rate (“APR”) as reflected on the Truth In Lending Disclosure or “TIL”;
- Acknowledgement that property is or is not located within a flood zone;
- Acknowledgement of receipt and review of termite letter;
- Acknowledgement of receipt and review of survey;
- Disclosure of information relating to lender’s history of transferring/selling loans.
- Loan Application – standard form which reflects the income, assets, debts and other pertinent information used to qualify borrower for the loan.
- IRS form W-9 – verifies the borrower’s social security number for the reporting of payment of interest to the IRS.
- IRS forms 4506 and/or 8821 – authorizes the lender to obtain information from the IRS to verify information on application form.
- First payment letter – shows total payment amount, date of first payment and information regarding where to remit payment.
- Affidavits: Where applicable, buyer executes sworn statements relating to:
- owner-occupancy of the property;
- same name affidavit–name variations or “aliases”;
- the non-existence of secondary financing unless pre-approved by primary lender;
- current employment and income;
- truth and accuracy of all information supplied to the lender;
- agreement to co-operate in correcting minor documentation errors if discovered later
- other matters specific to the particular transaction.
- Funding Requirements
Mason Title & Escrow handles millions of dollars for hundreds of real estate settlements every month, and our primary goal is to preserve the integrity of the escrow accounts, which contains Other People’s Money, including your money. We have adopted funding practices designed to protect everyone’s money while assuring a smooth closing.
If you are required to bring money to a closing or receive money after a closing, here are our requirements and procedures, designed to further the goals of smooth closings and protecting the money.
- Disbursements cannot occur until all the money necessary to fund the file is in Mason’s escrow account, at a minimum in the form of Good Funds as defined by Florida law.
- Wire Transfer is the preferred method of receiving funds necessary to close. This is the safest way for all parties to transfer funds in the large amounts required. Mason Title’s wiring instructions are here on this website.
- Cashier’s checks are still accepted by Mason Title, although many companies in the industry no longer accept them at all. They are risky for both the issuer and the company accepting them. Cashiers checks are subject to verification with the issuing bank which may delay disbursement. LEARN MORE ABOUT CASHIERS CHECKS.
- Intra-bank transfers from a Bank of America account to Mason’s Bank of America Escrow Account do not result in immediately collectable funds and may result in a hold of 24 hours or longer until verified, so they are not a good alternative to wiring funds.
- Personal Checks cannot be accepted except for minimal amounts of $100.00 or less which might be needed to balance a file when adjustments are made after closing numbers are issued.
- Earnest Money Deposits may be made by personal or company check, so long as there is sufficient time before the scheduled closing for the check to be “collected” in the account. Allow two weeks between deposit and disbursement in most cases. For closings occurring sooner than that, please bring cashiers checks or wire the funds.
- Proceeds disbursements after closing are typically made with a check from our escrow account to the Sellers. Since Mason Title uses a “positive pay” system, escrow checks immediately taken to the bank for cashing or deposit may be subject to manual verification at the bank. The positive pay feature lets our bank know that the check being presented is validly issued to the party payee in the amount shown on its face. The verification is done automatically periodically during the day, and presentation between automatic uploads will require manual verification, which only takes a few minutes.
- Proceeds can be wired. Please ask the closer to do so and provide a voided check or deposit slip, and sign the provided authorization to wire.
- Proceeds cannot be disbursed to third parties. Federal law requires disbursements be made only to the parties on the settlement statement.
These procedures are designed to protect the funds in the escrow accounts of all the parties. If the Title Company you use does not require these minimum steps to protect the accounts integrity, shouldn’t they? Are you needlessly being exposed to risk?
- Using ResWare To Your Advantage
Mason Title & Escrow Company uses one of the most advanced, sophisticated, title & escrow file management systems available–ResWare.
ResWare manages the entire transaction through a single interface, and puts the power in the users hands, and in the hands of the customers. We count on ResWare for:
- Workflow and Automation Management
- Vendor Management
- Document and Template Management
- Communications Management
- Title Production
Why does this matter to Realtors, Seller, Buyers, Lenders and Brokers?
- Parties to the transaction, when assigned access codes, can log into a customized Web site to view their files, download documents, enter orders online, and correspond with employees. Access continues after the closing, so documents needed later–title policies, settlement statements, surveys–can be retrieved at any time
- Customizable workflow ensures staff consistency, reduces missing information or documentation, improves communication internally and externally, making for smoother and error free closings
- Communication Management shares information about files across the employee base, making it possible for multiple persons to assist with files if assigned staff are not readily available
- ResWare turns all documents and communications into electronic files, reducing paper and document misplacement, and making those documents readily accessible to all authorized parties.
- Employees communicate quickly and effectively through e-mail, faxes and the ResWare interface directly from a customer file, and all such communications are logged and preserved.
- Incoming e-mail messages and attachments are automatically locked to a customer file when a valid file number is found in the e-mail’s subject line, making ResWare the central repository for all communications.