Chapter 14 - The Closing

The day finally arrives when you get to the closing of your first home. It is up to the seller (usually the sellerfs attorney) to pick the place where the closing will take place. This is usually at a title company, but in some cases, it can be at the office of the sellerfs attorney and an escrow office will travel to the attorney. This all depends on the title company that is used.

Prior to the closing, you will need to contact the title company and find out how much money you should bring to the closing. In an ideal world, they would contact you a day or two ahead of time. In the real world, you will be calling them up until 5:00 p.m. the night before your closing which is 9 a.m. the next morning to get the amount that you need to bring in. If you have an attorney, the attorney should be finding this information out for you.

Once you understand how much you need to bring in, you will have to go to the bank and get a cashierfs check for the amount. The title company will not take a personal check. You can have the check made out to yourself so you can just endorse it over to the title company at the closing.

You also need to bring a photo ID and proof of homeownerfs insurance to the closing. You should get a receipt and an insurance rider from your agent that proves you have homeownerfs insurance on the house.

At the closing, you will have to sign a series of documents. This includes the lenderfs documents, which are usually in a large stack, and the title documents. The lenderfs documents usually include a lot of legal forms, most of which pretty much state that you give them the right to make any corrections or agree to sign again if there are corrections needed. You will also have to sign the Truth in Lending Form, the Mortgage and the Note. The mortgage and note are recorded instruments and must be signed exactly as stated. The Truth In Lending gives you the total amount that you will be paying back in interest as well as a higher interest rate because it is the compounded daily rate. It is a very scary form and is also required to be mailed to you prior to the closing. You will also sign a typed up application.

If you have a common surname, you will probably have to fill out an affidavit stating that you are who you say you are. This is because there are probably a lot of people with your name who have liens and judgments against them and you do not want to be confused with them. This is a standard form.

Closing documents will be the HUD-1, the sellerfs closing statement and the tax transfer forms. Most states and counties and some municipalities require the seller to pay a tax whenever the property is sold or transferred as a way to collect more revenue.

You will get an Affidavit of Title which is proof that you purchased the property. You will not receive the deed as it will have to be recorded and will be mailed back to you after recording. The affidavit of title is the deed until then.

You will also get a Bill of Sale. This is for all of the things that you are buying that are not technically part of the house. These are usually listed on the contract and include things like appliances, draperies, ceiling fans and garage door openers. In some cases, people have other items that are sold with the house and some real estate agents go overboard and write down things like gwall to wall carpeting.

Copies of all the lenderfs documents will be provided to you along with the copy of the closing documents. You do not need copies of the tax transfer forms or anything else that you are not paying for. What you want to take away from the closing are the following:

ｷThe original Affidavit of Title signed by the seller (you do not sign this document)

ｷThe original Bill of Sale signed by the seller (you may sign this document)

ｷOne of the original HUD-1 forms singed by both you, the seller and the escrow officer

ｷOne of the original Sellerfs closing statementfs signed by you and the seller

ｷThe title commitment with the intent of getting a policy in the mail

ｷA copy of all of your lenderfs documents including the mortgage and note

ｷThe survey

ｷThe appraisal

ｷAny other pertaining documents (condominium bylaws, etc.)

ｷGarage door openers

ｷKeys to the house

Once you have received the keys, the closing is over. You can pay your attorney by check or you can include his or her fee in the settlement statement. If you are getting an FHA or VA mortgage, you will have to pay him outside of closing.

Your mortgage is paid in arrears. This means that it will be due on the first of the month for the month that preceded it. If you close on April 15th, the amount from April 16thto April 30thwill be included in your settlement charges. Your first mortgage payment will then be due on June 1st(for May). This gives you time to get yourself established. You should seriously consider having your mortgage taken out of your checking account each month. Although the mortgage is due on the 1stof the month, you have a 15 day grace period. This means that you can wait until June 15thto pay your May mortgage. However, if the 15thfalls on a Sunday or Holiday, some lenders will penalize you for making a late payment if you pay on the 16th.

It is not difficult to own a home. It is not only easy to purchase a home, especially in todayfs market, it is a good investment. If you follow the instructions in this book, you will have not only provided yourself with shelter which you need anyway, but also made a solid investment that will continue to accumulate in value for the years to come. You will also have given yourself a tax break as well. The interest that you will pay on your mortgage can be deducted from your income tax as well as the property taxes. Any points or closing costs can be deducted for the year that you closed on the property.

Good luck in buying your first home!