Closing the Deal
The day has finally arrived--it's time for the closing! When the closing is completed, the entire process for buying a home will be completed, and you will officially be a homeowner!
After you apply for a mortgage from a lender, the lender is required by federal law to send you, within three days, a good faith estimate of your closing (or settlement) costs. Typically, closing costs can range anywhere from 2 to 4 percent of the cost of your home.
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The day before the closing, you can request a copy from the closing agent of your Uniform Settlement Statement, which lists the costs and fees you will be expected to pay at the closing. You should do your best to get a copy of this list before the closing, because it lets you know what to expect at the closing. It gives you a chance to contest any question or problem before the closing and, even if everything is in order, it makes the actual closing go all that much smoother.
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What persons will likely be present at your closing? There is the buyer, the seller, one or both real estate agents, an attorney for each or one of the parties (or in some parts of the country, an escrow agent, chosen by either the seller or buyer depending on the area's custom, will attend instead of an attorney), the lender's agent, an agent or whomever is holding your down payment and other monies such as a sales binder, and a title insurance company agent. Will all these parties be present at your closing? Not necessarily, but a close combination of the above people are almost certain to be there.
Common closing items. Here's a list of the most common items that you or the seller may have to pay or sign at your closing:
- Mortgage application fees
- Appraisal, survey and inspection fees
- Loan origination fees
- Points
- Lender's attorney fees (sometimes split between seller and buyer)
- Buyer's attorney fees
- Seller's attorney fees
- Lender's credit report fee
- Broker's commission (usually paid by seller)
- Title search fees (often paid by seller)
- Title insurance (often paid by seller)
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- Private mortgage insurance (PMI) (if required)
- Assumption fee (for mortgage being assumed)
- First premium for homeowner's insurance
- Prorated property taxes
- Interest accrued between closing date and beginning of next interest period
- Recording deed fees
- Escrow accounts for homeowner's insurance and property taxes (required by lender)
- Closing company's fees
- Down payment amount
- First month's mortgage
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Tip
Don't be intimidated or reluctant to ask questions about anything you are signing or paying, even if it is at the actual closing. Make sure you receive a satisfactory explanation for any issues you have. After all, buying a home is a huge financial and emotional step, and you deserve to be fully informed about any concerns you might have.
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