CLOSING TIME

closingThe last step in the home buying process is commonly referred to as the closing. The close of escrow is when all steps—from acceptance, title search, inspection, mortgage approval, and so on— come together in a final transaction. Documents are ready to sign, the buyer is ready to hand over the purchase price and the seller is ready to transfer title. And most importantly, the keys!

It usually takes about an hour and may be attended by some or all of the parties involved: buyer, seller, real estate sales professional, attorney and title company representative. The buyer reviews and signs the loan and real estate documents and pays for the property, closing and other costs.

Assuming that the funds are in order, the deed is correct and the title is clear, the final step is the disbursement of funds to the seller. The title company should have the funds in its possession, but the buyer needs to bring a cashier’s or certified check for the down payment and the closing costs if it was not included in the mortgage loan. If the buyer’s annual real estate taxes and homeowner’s insurance will be paid through the lender, an escrow account will also be established.

Once all the papers are signed and funds are disbursed, the buyer receives the keys and is now a homeowner.

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HOW DOES THE CLOSING PROCESS WORK?

Article courtesy of Trulia.com

keysIt would be great if closing a real estate transaction was like buying a new bike or TV, just cruise through the aisles, pick your favorite model and head for the register. But this just isn’t the case. Real estate transactions are complex and involve as many as twenty different players including real estate brokers, buyers, sellers, attorneys, inspectors, appraisers, lenders, and often contractors. Because of this, even the simplest transaction today typically takes between 30 and 45 days to close.

The closing process begins with the acceptance of an offer which is prepared by the parties themselves, a real estate broker, or often an attorney. This process varies by state but often involves an initial offer or letter of intent from the buyer followed by a series of discussions and or negotiations with the seller. Once an agreement is hammered out the details are typically memorialized in a written form that all parties sign.

Once accepted the offer is typically placed with an escrow company. An escrow company is a depository for legal documents and often acts as a notary and closing agent to process signatures and monies for the parties involved in a transaction. It’s important to note that they do not represent either party in the sale, and because of this they are often referred to as a neutral third party in the transaction. In some states an attorney may act as the closing agent and prepare the closing documents.

Prior to closing, all of the conditions of sale must be met. These conditions are often referred to as contingencies. The most common contingency is the buyer’s ability to secure a new mortgage. Often this is the most time consuming aspect of closing a real estate transaction as the lender must conduct employment verifications, credit report reviews, financial statement reviews, and order an appraisal for the home itself. In addition many buyers and their lenders require an inspection of the home. These inspections can vary by state and local custom but often include pest and dry rot inspections, whole home inspections, or specialized inspections that are area specific like a radon gas inspection.

While the escrow is opened, a title company may be hired to conduct a preliminary title report. This report will provide a comprehensive review of all of the recorded documents which affect the deed to the property. Examples include easements, liens, tax assessments, covenants, conditions and restrictions, and homeowner association bylaws. The buyer and lender must approve of the preliminary title report prior to closing.

Once the conditions of sale have been met and the preliminary title report has been approved, all parties will agree to sign closing documents. In some states this will mean that all parties will meet together and sign documents at the same time, while in other areas it is customary to sign independently. Once the documents have been signed, notarized copies will be forwarded to the lender, funds will be released, and the sale will be recorded at the local recorder’s office.

Lost? Not to worry, many escrow companies are happy to provide a local guide of what to expect when closing a transaction in your area. In addition, an agent will be happy to explain the local customs for your specific market.

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WHAT TO DO IF YOUR SPOUSE CAN’T COME TO THE CLOSING

Article courtesy of Robin Gronsky of Gronsky Law

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It’s almost time for the closing and you discover that your spouse will need to be on a business trip during the time that you are supposed to close on your house purchase.  What do you do?

You can ask the sellers if they would be willing to move the closing to a date that would allow your spouse to be at the closing.  The date that is set in the contract as the “Closing Date” is not set in stone.  It can be pushed forward or back, depending on the needs of the parties.  But, the sellers are not required to agree to a change of the Closing Date.

There is another solution.  Your spouse can sign a Power of Attorney that will allow you to sign on his/her behalf.  The Power of Attorney is prepared by your lawyer and must be approved by your lender and your title agency.  There are specific clauses that must be in the Power of Attorney so it is not a do-it-yourself job.

Once the Power of Attorney has been approved, you will have the ability to sign any document on behalf of your spouse that concerns the purchase of your new home.  It does mean that you will be signing each document twice (and that is a lot of signing).  But it allows you to close on your home without totally inconveniencing everyone.  So, don’t worry if one of you can’t come to the closing.  There are always solutions.

Email Robin Gronsky at Rgronsky@Gronskylaw.com to find out how she can become your trusted legal advisor, helping you when you buy or sell real estate.

Robin M. Gronsky
Attorney at Law
315 North Pleasant Avenue
Ridgewood, New Jersey  07450
RGronsky@GronskyLaw.com
(201) 251-8001

 

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FOUR WAYS TO AVOID SURPRISES AT THE CLOSING TABLE

Article courtesy of Trulia.com

A lot of work goes into getting to the closing table when you are purchasing a home. Here are tips you should adhere to to help thwart any last minute glitches or hitches that could come between you and your new home – or your cash.

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1. Halt Major Money Moves
From pre-approval to closing, lenders are watching your credit report. Avoid any major changes to account balances, credit limits, or other money-related activity that could change your financial status in any way. This includes large deposits (other than your normal income) that come in before or during escrow. If you have them, be prepared to explain them and document their source or they could stand in the way of your loan. Other common last-minute money hang-ups include new credit accounts and
new collections or judgments.

2. Tell the Whole Truth
Be up front and honest with your agent and loan officer from the beginning and you’ll be much more likely to be successful when it’s time to close the deal. Loan underwriters will verify and re-verify the facts on your loan application including credit, assets, marital status, employment, and more until the last minute. New mortgage guidelines have created a virtual gauntlet of multiple application reviews by multiple underwriters before.

3. Closing Documents: Read Ahead
Get and review your closing documents in advance so you can confirm important details like the interest rate and monthly payment, ask questions, and initiate any corrections in advance. With more than 300 pages to review, chances you’ll be scrutinizing every line at the closing table are slim – and if you do catch an error, the time it can take the lender to revise and reissue a set of papers can throw your moving calendar entirely out of whack and potentially cost you more money.

4. Watch the Calendar
To avoid additional fees at the closing, stay on top of important deadlines for approvals, offers, inspections, and others. Also, make sure your real estate and mortgage brokers are in close communication, and ask them to keep you apprised of how any closing date changes affect your bottom line. A change in closing date can affect interest rates, closing costs, and other factors that adjust over time and ultimately have an impact on the size of the check you’ll have to write to close the deal.

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