Closing the Deal

When closing day finally arrives, you will be able to take possession of your new home. Here are some of the things that take place during closing.

The price of the house is presented to the seller, who either retires the old loan, or signs it over to the buyer (if you are assuming the loan). The real estate agents involved get a commission on the sale, and all of the outstanding fees are paid from the proceeds of your loan, including title insurance premiums, filing fees, survey costs, and attorneys' fees and inspection fees, if applicable. The buyer gets copies of the documents that transfer the property's ownership from the seller to the buyer.

As the buyer, you will be signing a number of documents at closing, so here is a list of those documents and what they mean:

• Settlement Statement - This is an itemized list of the closing costs, and shows which cost is attributed to which party. A number of prorated expenses are also listed, including property taxes, insurance premiums, and other recurring expenses that usually paid on a yearly basis. If the seller has already paid those items, you will be charged an amount in proportion to the remaining number of days in the year. If the payments are due after closing, you will receive a credit for the number of days prior to closing.
• Loan Disclosure - This document provides certain information about the mortgage loan, including the annual percentage rate (APR). It also shows the total amount of interest you will be paying over the entire term of the loan, the monthly interest and principal payment, how many payments will be made over the course of the loan, and when the first payment will be due.
• Mortgage Note - This document shows your responsibility to repay the amount you borrowed.
• Deed of Trust - This document provides the house as collateral for the mortgage loan.
• Deed - This document transfers title to the property over to you. It is usually titled "Warranty Deed," which means the seller has guaranteed that the title is free and clear of all other claims against it.
• Title Policy - If any legitimate claims on the property title arise, this document provides protection for you.

When you get to closing, the time for negotiations is over. So if any problems arise, closing may be delayed. This can cause a great deal of inconvenience for both parties. For instance, if you are moving out of an apartment, you may have to be out by a certain date, which means if your closing is delayed, you may end up having to stay in a motel and put your belongings in storage until the new closing date. If the seller is planning to move into a new home contingent upon sale of his current home to you, his plans could be delayed, and he might even lose his new home.

Generally, closings can be delayed due to trouble clearing the title or if the buyer has not yet been approved for a mortgage loan.