Preparing Your Real Estate Clients for Closing
Closing day is an exciting time for home buyers especially when things go smoothly. Unfortunately, it can also generate a lot of stress if they don’t know what to expect. Help your buyers feel less anxious about one of the biggest transactions of their lives with this real estate closing guide.
Two Important Steps During Closing
Signing all legal documents: This will include an agreement between your client and the chosen lender regarding the conditions and terms of the mortgage agreement. It will also include an agreement between your client and the seller. It’s important to carefully read through every document before signing it and never sign forms with spaces or blank lines.
Paying escrow items and closing costs: Most closings require the buyer to bring money to address the numerous fees associated with acquiring a mortgage and transferring home ownership. This will usually be a cashier’s check directly made out to the escrow company. It could also by a wire transfer to the lender. Some transactions will wrap the closing fees into the total loan balance.
During closing, your client will need to provide government-issued identification, such as a driver’s license or passport.
Who Needs to Be There?
Although closing procedures will vary by state and county, the following parties usually need to be present:
- The seller and the seller’s real estate agent
- The buyer and the buyer’s real estate agent The lender
- Closing agent who may work for the title company or lender
- Attorney working as the closing agent on behalf of either the buyer or the lender
- Representative for the title company, who can provide written evidence of property ownership
The closing real estate agent will usually conduct the settlement meeting and ensure that every document is signed and recorded and that all escrow payments and closing fees are paid and properly distributed.
At closing, the buyer will receive the following important documents:
- Loan estimate, containing details about the loan, interest rate, terms and closing costs
- Closing disclosure, which outlines all the details of the mortgage
- Initial escrow statement, which contains any payments the lender will pay from the buyer’s escrow account including taxes and insurance during the first year
- Mortgage note, which includes the amount and terms of the loan, your client’s promise to pay the mortgage and what the lender can do if they don’t follow through
- Deed of trust, which secures the note and provides the lender with a claim against the home if your client doesn’t pay the mortgage
- Certificate of occupancy if your client is buying a new construction home
Once they’ve reviewed and signed every necessary closing document, your client will officially become the owner of the home. Just be sure to review each item to make sure their name is spelled correctly throughout and that there are no surprises lurking in any of the documents.
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