Closing Your Loan
The Closing Process
Go to any courthouse and you can find property records
detailing real estate ownership in your community --
sometimes records that date back more than a hundred years.
These records provide important proof that there is a good,
marketable and insurable title to the property. Equally
important, such records enable buyers to provide proof of
their ownership when they sell.
The closing process, which in different parts of the country
is also known as "settlement" or "escrow," is quickly
becoming computerized and automated. In many cases, buyers
and sellers don't need to attend the closing; signed
paperwork can be sent to the closing agent with overnight
delivery.
Closings bring together a variety of parties who are part of
the "transaction" process. For example, while the history of
property ownership has been checked, it's possible that the
records contain errors, unrecorded claims or flaws in the
review itself, thus title insurance is necessary. At
closing, transfer taxes must be paid and other claims must
also be settled (including closing costs, legal fees and
adjustments). In most transactions, the closing agent also
completes the paperwork needed to record the lien.
What to Expect
Settlement is a process where all of the necessary paperwork
needed to complete the transaction is signed. Closing is
typically done at a title company, sometimes with both buyer
and seller at the same table, sometimes with each party
completing their papers separately.
Whatever the case, the result is that title to the property
is transferred from seller to buyer. The buyer receives the
keys and the seller receives payment for the property. From
the amount credited to the seller, the closing agent
subtracts money to pay off the existing mortgage(s) and
other transaction costs. Deeds, mortgage papers, and other
documents are prepared, signed and filed with local property
record offices.
What You Need to Do
One of the best parts of "closing" is that buyers and
sellers need to do very little.
Before the closing, buyers typically have a final
opportunity to investigate the property to assure that its
condition has not materially changed since the sale
agreement was signed. At closing itself, papers have been
prepared by closing agents, title companies, lenders and
attorneys. This paperwork reflects the sale agreement and
allows any parties to the transaction to verify their
interests. For instance, buyers get the title to the
property, lenders have their loans recorded in the public
records as a lien and the government collects the transfer
taxes.
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