What Happens at a Residential Real Estate Closing?
There is a fair amount of confusion about what happens before and at the closing of your residential real estate deal. In general, your closing will take place at the office of the title company which is issuing a title commitment or at the seller's attorney's office. Due to new lending regulations which went into effect in the fall of 2015, you should have an estimate of how much money you need to bring to closing (your "cash to close") at least seventy-two hours prior to closing. The amount of cash needed to close will cover you for the entire transaction, meaning any debits, credits, and fees will be included in that final number. You should provide your attorney with receipts for anything that has been paid prior to closing, such as homeowners' insurance premiums, inspection report costs, etc. I recommend that my clients bring a bit of an excess of funds to the closing in case the "cash to close" number has not yet been finalized. Any overage will be refunded to you at closing by a check or wire transfer issued from the title company. If the amount due at closing is less than $50,000.00, you may bring a cashier’s or certified check payable to the title company. If the amount due at closing is greater than $50,000.00, the funds must be sent via wire transfer prior to closing. I recommend wiring any funds no later than the night before your closing.
At closing, you and your attorney will go through your loan documents (if applicable), the most important of which are your note, mortgage, and closing statement. Though these documents consist of mostly boilerplate language, you should make sure that your attorney has explained them to you sufficiently prior to signing, as this will likely be one of the biggest financial investments you make in your lifetime. Once your attorney has reviewed the loan documents with you, the title agent will send them to your lender for their review. Once the lender confirms that all of the required signatures have been made, the lender will authorize funding. As you are waiting for that authorization, you will review the seller's documents which are drafted by the seller's attorney and consist most importantly of the deed, bill of sale, affidavit of title, and ALTA statement. There are generally additional items which your attorney will need to review such as a paid assessment letter if there is a condo or homeowners' association connected to the property.
Please be aware that if you are securing a loan, with very rare exceptions, you must be present at closing. If you have a lender, at closing you must have a homeowner’s insurance policy listing your lender as an additional named insured and a paid receipt for the first year’s premium. In general, this item should be cleared by your lender well before the actual closing. If a lender is not involved, you should make sure that you have an insurance policy effective as of the date of closing. At closing, you will need a driver’s license or other government-issued photo ID so that the title agent can notarize your signature.
Once you have funding authorization from your lender, the title agent will issue any of the necessary checks, keys will be exchanged, and you will officially be a homeowner! The entire closing process, if a loan is taken, generally takes less than an hour and a half. If you have any questions about the process, please do not hesitate to contact me.
