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Real Estate Holiday Checklist: Essential Steps for Stress-Free Closings [Part 1]

December 1, 2023

Real estate can be challenging, and this goes not only for those who have little to no experience with it but also for those who are familiar with the procedure. Therefore, whether you're a repeat home buyer, have experimented with the market but never made a commitment, or were never familiar with real estate at all, creating a solid plan before a closing can help reduce stress when the time comes. 

Even seasoned professionals may find closing difficult as they negotiate for rates on house insurance all the while taking the home you desire and your needs into consideration. Although it can be tempting to put your emotions aside to come across as a professional and skillful negotiator, many seasoned real estate professionals advise going with your instincts and asking as many questions as necessary about the closing process, regardless of your level of experience.

Getting to know the basics of closing a house is good, but continuously learning about it as much as you can is even better.

In this two-part post, we'll help understand what these are all about.

What You Need To Know About Closing

What Does Closing On A Home Mean?

Closing happens when the buyer obtains the title to the property from the seller. It also means the end of the mortgage loan procedure. Similar to how you "open" negotiations with a seller by making an offer on their home, closing is the final stage of the buying process that concludes when the sellers accept your purchase offer. As you proceed with the transaction's settlement, you will examine, approve, and date the relevant documentation.

Where Does Closing Happen?

Most of the time, the lender is the one who decides where the closing will take place. The closing procedure usually happens at the subject property, although it's more typical to go over the required paperwork in an escrow agency or a title company.

However, because of the COVID-19 pandemic, full closing virtually has become possible.

Which Parties Are Present During Closing?

The state and sometimes even the county where you are buying a home will determine who will be present at your closing. In case relevant parties are not present in one place because of the pandemic (or other similar scenarios), a virtual meeting should take place.

Nonetheless, there are certain participants you can anticipate being involved in the process, regardless of the precise location, including:

  • You (the borrower)
  • Your mortgagee or mortgage company (the lender)
  • Your attorney (although not necessary in every state or jurisdiction, it is strongly advised that you get legal counsel to represent your interests exclusively)
  • A title company representative (providing you with formal documentation of property ownership)
  • The seller of the house, the agency they hired to represent them during a close, or both.
closing on a home documents

What Closing Documents Will Be Evaluated?

As mentioned, closing on a home is a thorough procedure requiring tons of paperwork. Every stage of the procedure and interaction with the people involved in your closing is recorded on forms. 

Here's a brief explanation of what these documents are:

Promissory Note

This agreement is your promise to your lender to reimburse them for the amount you owe on the mortgage secured by your house.

Deed Of Trust / Mortgage

This serves as evidence provided by your lender of a lien placed on the assets you provided as loan security or collateral. In essence, this paperwork protects your loan and gives your lender instructions on how to move forward in case you are not able to pay the loan.

Closing Disclosure

A closing disclosure, officially known as Form HUD-1 and sometimes referred to as a settlement statement, is an official list of itemized costs along with other pertinent mortgage-related information. This should contain your mortgage payment schedule, the other terms of your loan, and/or any charges required to pay. 

You must receive an itemized closing disclosure at least three working days before the closing date as required by law. Make sure you submit a request with enough time for the lender to react by consulting with your agent or representative.

Depending on standards maintained by your lender or applicable legislation in your state, you can come across additional paperwork during closing. These may consist of:

Initial Escrow Statement

To protect your closing transaction against fraud, many jurisdictions mandate that you form an escrow account or an account overseen by an impartial third party. If so, the amount that your lender will deduct from your escrow account during the first year of your mortgage repayment plan to pay for taxes, insurance, and other costs is specified in the escrow statement.

Estimate Of Loan

This projected, detailed list of all the charges associated with your closing—also known as a good faith estimate—should be formalized in your closing disclosure. Ensuring this document is accurately documented in the final closing disclosure and that there are no significant differences between the two is very important.

Certificate Of Occupancy

This particular paper permits you to live in a newly built home. To find out if you need to receive this paperwork, you should speak with your agent, lawyer, or representative.

In the next part, we'll dive deeper into house closing, so be sure to click this link.

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8315 W. 10th Street
Indianapolis IN 46234

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