What To Expect At Closing

Knowing the process can take the mystery and fear out of owning real estate

steps home buyers can take to make the closing process as smooth as possible. To prepare for closing, buyers should pay attention to the following:

Know all the players and the process. At the settlement, the buyer, the seller, brokers for both parties, and the title company representative (or an attorney) meet to review the details of a property sales agreement before final signatures. All provisions of the agreement will be explained one last time.

First, any unresolved matters with the property are cleared up. Any problems with the property’s title not corrected during the walk-through will have been resolved. Also, title insurance will have been obtained. Next, the attorney or title representative will explain the Deed of Trust, the mortgage note, lender instruction forms, and the transaction settlement sheet to the buyer. The buyer signs all these documents and the balance of the downpayment is paid to the seller with a certified check.

The closing costs and settlement fees are also explained. They include loan origination fees, recording fees, county taxes, attorneys’ fees, and appraisal fees. The buyer may have to pay some of these fees at the closing. Closing costs are approximately 4% to 7% of the total loan. Any reimbursed fees for taxes or insurance that may have been paid in advance are returned to the proper parties as well. The seller and the brokers are supplied a copy of the settlement sheets for their records. The house keys are then passed to the owner.

Obtain closing documents in advance. It is recommended that the buyer gain access to the loan documents to review before the closing. That’s what Aisha Thomas did. The 27-year-old single mother qualified for a Michigan State Housing Development Agency (MSHDA) first-time home buyer program that provided a below-market interest rate mortgage since her income was below $69,000 and her credit score was above 670. Thomas secured her financing at LaSalle Bank, and found she also qualified for the bank’s $2,000 first-time home buyer grant and a $4,000 welcome home grant. She also contributed $3,000 from her own funds.

After all her grants were applied to her purchase, Thomas thought she needed $109,000 for the newly constructed two-bedroom home in Pontiac, Michigan, that she had her sights set on. However, two days before closing, she found that due to a discrepancy, the home would cost $110,000.

As it turned out, in order to get the special interest rate, Thomas’s loan had several special requirements. The buyer was required to pay a $1,000 fee, which would be reimbursed if she stayed in the home for 15 years. Since she hadn’t paid that fee up front, the cost had to be added to the loan at closing. Also, the original paperwork did not require a prepayment penalty. But because she was receiving an MSHDA loan, a 1% prepayment fee was required if the mortgage was paid off in less than three years. “Since it was a mistake on their end, I just had to agree to the changes because there

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