All of the inspections went well and my mortgage went through. I’m happy with the final walk-through. What do I need to know about the closing?
Part 8 of a 10-part series of FAQ posts on the real estate process from the buyers’ perspective.
Answer - Well for one, expect to be signing lots of documents. Your Realtor should have procured a complete Closing Packet for you at least one day ahead of time and hopefully a couple of days ahead. He/she should have also advised you to seek the counsel of a lawyer to go over any and all legal documents with you ahead of time. Although many do not use a lawyer, it is the law in Michigan that your agent at least recommends it. As the buyer you will be signing both the real estate paperwork and the new mortgage paperwork. The mortgage paperwork is by far the larger amount and gets even bigger if you used something like a fist and second mortgage to finance the buy.
If one of the parties cannot attend the closing there should have been provisions made for a Power of Attorney (POA) for the person who is attending to sign for the missing party. The POA should have been all signed and reviewed by the title companies ahead of time. Don’t spring a POA on the closer at the closing – it probably won’t happen if you do that. You title company should have been able to supply a POA for you to use.
If the seller was involved in a divorce after acquiring the house, it may be necessary to bring an official copy of the divorce decree to the closing. If a death was involved on the seller side, it may be necessary to bring an official copy of the death certificate to the closing. If there are/were any liens against the property that had been recorded (such as balances on sewer or road assessments) it may be necessary to bring Paid receipts or Unconditional Release of Lien documents to closing. If there has been any work done on the property by tradesmen since the signing of the Purchase Agreement, it may be necessary to bring receipts for the work and/or Unconditional Release of Lien documents. The seller’s title company will let the seller know what is required at closing. Hopefully all of those items will have been resolved ahead of time.
At closing, you'll have to have ID with you - a driver's license will do - as well as the certified or cashier’s check for the down payment and any other closing costs that you'll be paying. Do not bring cash to closing. The title companies will not accept cash; nor will they take your personal check. If the money is being wired in from your bank, you won’t need the check. Normally you will also have to pay a prorated portion of the taxes on the house from the date of closing through to the next tax date. You should have your proof of insurance for the homeowner's policy on the house, too. If you’ve provided that to your title company beforehand you may not have to bring it to closing.
All of the costs that you will need to cover should have been provided to you in the Closing Packet or by your mortgage person on your final HUD document. You should look that over and compare it to the Good Faith Estimate (GFE) that you should have received from your lender at the beginning of the mortgage process. The final HUD and the GFE should not be different in the areas of fees and costs. Click here to read a good tutorial on the HUD-1 and GFE.
Depending upon what you negotiated for possession of the house, you may get the keys that day (immediate occupancy), along with garage doors openers and anything else that the seller wished to pass along at that time or the sellers may remain in the house after closing and will give you possession and the keys at a later date. If that is the case, the seller's will now become renters in your house until the date that they turn over possession.
Arrangements for that turn over should be discussed at the closing so both parties understand how that will happen and agree upon when it will happen. The seller should understand where to turn in the keys. If there is a damage deposit involved the sellers and buyers will need to agree upon arrangements for a buyer walkthrough to assess whether there is any damage. Provisions for how to handle damage claims should have been included in the Purchase Agreement documentation.
The closing process usually has a time period after the flurry of document signing is finished and while the closers are making copies for everyone; that time is often used to allow the seller and buyers to discuss the property and allow the seller to answer questions or pass on tips. The buyers and sellers also exchange contact information then, so that the buyers can call the seller later with any questions that they might have. This is when you ask what day the garbage is collected and when the seller tells you about things like having to wiggle the key in the back door lock to get it to work. This is where you learn about “old Joe” the neighbor to the left who has everything you may every need to borrow and is a good guy to boot. Make good use of this time.
Most times when money is wired into the closing there will also be a time gap after the signing; while the signed documents are faxed or emailed to the bank, which then authorizes the wire. It takes time to send the wire and for the wire to clear and you could spend an hour or more just sitting there awaiting word that the wire has cleared into the title company account.
If all goes well, you’ll get the keys and be off to your new home. Congratulations!