FIRST TIME HOMEBUYERS PART 7: THE CLOSING
This is the final installment of our 7 part series attempting to familiarize first time homebuyers with the real estate purchase process. Even if you are not a first time homebuyer, and have purchased or sold a home before, you may find this series an informative refresher. In the previous 6 articles, we discussed the entire process up until the closing, and the various roles that the professionals you work with will play to get you to the closing table. In this article, we will discuss the closing itself.
In that regard - Congratulations! You have a closing date, and you’re almost finished with the purchase of your new home! Once the bank clears you to close, the attorneys will work with the title company, the seller, and local authorities, to obtain a meter reading, and identify any credits due to either party as a result of local property and school tax payments. The attorney will provide the you with instructions on what payment, and in what form, to bring to the closing. Depending on closing costs, including the cost of the title search, the title insurance, settlement of various tax liabilities and credits, and any other credits or debits negotiated prior to the closing, the bank and the purchaser will have to bring funds to complete the sale sufficient to satisfy the purchase price. Again, the manner in which the payments are made will be specified to you by your attorney in a document commonly referred to as "check instructions".
After the down payment and borrowed funds are applied, there is often an excess amount which must be covered by the purchaser toward the sale price. This is often referred to as 'closing costs.' This must be paid in the form of an official bank check. Other payments may also need to be made. The Title company will receive payment, the title insurance carrier premium might be sent via check at the closing table through the title company, tax and utility credits will be paid, and the title closer (a representative sent from the title company specifically to facilitate the closing) is often paid at this time as well. Attorneys fees are often paid at the closing, as are the real estate agents’ fees.
On the day of the closing, or the day before the closing, the purchaser conducts a final walk through. This is to make sure all of the terms agreed to in the contract related to the condition in which you will accept the property are met. This can include things such as the purchase of items from the seller (furniture, for example), the state of any fixtures such as an fuel or oil tank, and the cleanliness of the premises. If there was any work agreed to in the contract, you will want to make sure it is completed to your satisfaction.
During the closing, you will be provided with a large and imposing stack of documents, and most of the parties at the table will be anxious to get through them as quickly as possible. While it is important for you to take enough time for you to be comfortable with and knowledgeable about the documents you are signing, if you feel as though some people are gently trying to prod you to complete the document execution as quickly as possible, it is likely because they are. It might help you to feel less pressure if you understand why. Primarily, this is because, although you are signing the various documents, the bank waits until the documents are fully executed to provide “funding approval”. This final determination will be the authorization by the bank, to its representative at the closing, to release the funds, finally purchasing the property. Completing the documents as expediently as possible will leave ample time for funding approval.
At the end of this process, finally, you will own your home. The deed will be filed, you will have the key, and if you have not already started moving items into the property pursuant to a pre-existing agreement, you are free to move in. Perhaps more importantly, you should allow yourself a moment to relax, and reflect on the benefits of homeownership. You will want to make sure you’ve obtained the keys to the location.
Our office would love to be part of this fantastic step, and to help guide you through one of the most important steps you can take to secure a bright future for you and your family. If you would like to discuss a potential home purchase, don’t hesitate to call us. You can reach us by phone by navigating to our contacts page, or by calling us a (914) 214 9032 or (718) 614 8739.