The closing is the end of weeks or even months of research and decision-making. The closing could last less than an hour but may take longer, depending on the complexity of the transaction. It often occurs at the title company's office. The title company officer will explain each document before you sign. You may have your attorney present as well.
Two basic kinds of documents
If buying a home were a cash transaction, you would simply hand over the money and receive the deed. More than likely, however, you are borrowing money for the home, which means that you are actually making two transactions - acquiring the loan and buying the home.
As a borrower, you will sign a note promising to repay the loan and a deed of trust (also known as the mortgage) pledging the house (or other collateral) as security for the note. You will also sign numerous other papers including things such as:
- certificates, etc.
Be sure to read each document carefully.
Ask questions if you do not understand anything.
There are no dumb questions. Seriously consider having your attorney present at closing.
As a home buyer, you will present a cashier's check (or other good funds) to the seller, sign a document that itemizes closing costs (the lender will have given you an estimate in advance), and pay your share of the closing costs. In return, you will receive a deed, transferring ownership rights to you.
The home is yours.
At the end of the meeting, you will likely receive keys to the property. At that moment, the home will be yours. Occasionally, possession of the property will occur after closing. For example, the seller may have negotiated with you for a few extra days after closing, or the loan will not immediately fund, or other concerns. But, in most transactions, you will be the new owner at the end of closing.
Some other points to keep in mind:
Buyer/Seller Agency. It's important to understand who your REALTOR® represents - buyer or seller. The REALTOR® will provide you with information about representation.
As a buyer you may sign a buyer representation agreement with a REALTOR®. It will discuss the scope of the REALTOR®'s representation.
Prepaids. You should be aware that your closing costs will include prepayment of an escrow account to cover insurance and taxes.
REALTORS® are required to make properties available without regard to race, color, religion, national origin, sex, disability or familial status.
Be sure to have a property inspected by licensed inspectors to determine:
the condition of the property
(structural, mechanical, electrical items, etc.)
any environmental conditions
(asbestos, lead-based paint, toxic materials, etc.)
Brokers are not qualified to perform such inspections.
Residential Service Contracts are available for purchase. In such contracts the residential service company agrees to, subject to the terms of the contract, repair the appliances, electrical, plumbing, heating, cooling or other systems in the property.
Be sure to obtain a policy of title insurance or have an abstract of title reviewed by an attorney of your choice before buying a property. Seek the advice of an attorney of your own choice before entering into a binding agreement.