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What Is Buyers Closing

Your Goals

The final stretch of the home buying process comes when it is time to close. A closing date is set to complete your purchase. Officially, the closing is when the title is transferred from the owner to you as the buyer. You’re expected to pay a number of fees at the time of closing that typically amounts to a couple thousand dollars depending on how much the overall loan is.

The Closing Process

Closing on a home purchase is set for a specific day and time at a bank, attorney’s office or with the title company. You, the seller, other parties associated with the buying process will all be present for the completion of all paperwork and payment of the necessary fees. The fees are not set in stone and will vary for each transaction depending on the loan amount, interest rate, and individual fees charged by parties such as the appraiser. The average amount for a closing is about two to four percent of the total loan amount.

Transferring Ownership

The transfer of property is when the title and contract are signed by both the seller and buyer. Forms must be filled out and notarized to ensure the validity of the transaction. Ask your agent or broker that you’re working with if you have any questions about what you need to do before the closing date or any other uncertainties. Keep in mind that you might be stressed and overwhelmed with everything that is going on, but at the end of the process you’ll walk away with the keys to the home you’ve been working so hard to get.

Settling and Paying Fees

A number of fees must be paid at the time of closing. These can include an application fee, appraisal fee, attorney fees, closing fee to the company conducting the closing, a home inspection fee, an origination fee for the loan as a whole, pest inspection, recording fees for the city or town and a survey fee for someone to evaluate the boundaries of the property. You may pay some of these fees at the time the services are rendered, which is why you should know exactly what you need when you walk in the door to complete the process.

Settling and Paying Taxes

You’re responsible for paying taxes on the day you take possession of the property. They must be paid ahead of time. You may be required to pay the taxes for the remainder of that tax term that you’ll own the property. If you buy a property where taxes are collected twice a year, but you move in three months into the term, you’re responsible for paying the three months until the next term when you close on the property to cover what the previous owners have paid ahead of time.

Establishing an Escrow Account

An escrow fund will be established and funds placed there from each of your monthly mortgage payments. This account will establish a source to pay your yearly property taxes, insurance payments and other yearly fees such as your HOA fees. Automatic payments will be made yearly to these agencies by your bank or finance company. In turn, your bank of finance company will evaluate this account fund yearly to insure funds will be available to make the future payment. This will result in your mortgage payment increasing or decreasing according to the funds in the escrow account.

Home Owner and Flood Insurance

If your home is located in a flood zone, your lender will require you to carry insurance specifically for flood damages along with your regular home owner’s insurance policy. Proof that you have purchased both of these types of insurance if required, must be provided at closing to let the bank, credit union or other lender know that the home is fully insured to protect their collateral until the loan is completely paid off. The only way to get around this requirement is if you are buying your home with cash, but this is certainly not the norm. It’s also wise to have insurance to cover your own investment, even if you don’t owe money on it.

The closing process isn’t the most exciting process and can be very stressful as everything that you’ve been working towards is established. Working with your real estate agent and staying in close contact at this point is very inportant. Signing the papers, going through everything to ensure there are no questions or concerns, and knowing that your next step is going to be moving into your new home.

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