What Happens At The Closing Table?
Closing in real estate refers to the last stage of the buying process. It involves the signing of documents in the presence of legal entities from the both the buyer and the seller’s end.
The closing stage comprises of three parts, depending on whether the buyer will buy the house with or without a loan. The initial phase of the process done at the closing table includes the buyer thoroughly reading the initial estimates and comparing them to what has been presented to them at the closing table. This happens so that the buyer can identify whatever they aren’t sure of/comfortable with for prompt handling by the lender, seller, escrow officer, or closing agent.
The time spent at the closing table depends on the paperwork and the number of individuals present. It also depends on how complicated the transaction is and the state’s policy in which the property is to be sold. It can range from a few minutes to a good number of hours. Read on to know what to expect at the closing table.
- Before signing the documents kept in front of you, you must carefully go through each of them and seek explanations on whatever they do not understand.
- Depending on the buyer and seller’s agreement, the buyer will either pay the full closing costs through an acceptable payment method or will share it with the seller.
- The seller and lender are obliged to explain the reason for any discrepancies noticed by the buyer/buyer’s attorney and correct them if possible.
- Furthermore, the buyer will have to create a specific account through which mortgage payments will be made. It is known as an escrow account, and the details of the setup ought to be explained clearly by the escrow officer before the buyer agrees to it.
- The seller signs documents showing the transfer of ownership to the buyer only when he/she is comfortable doing so.
- The buyer may be given the keys to their new home at the closing table, depending on the agreed-upon.
Documents Signed at The Closing Table
The Mortgage Promissory Note
As the name implies, it is a document the buyer signs to assure the lender their loan will be paid within the stipulated period. It also includes the route through which it’ll be paid, the interest rate, the amount to be paid, and how much time a buyer has left to complete payment. Going through this document in detail is imperative as signing means the buyer has accepted the terms and conditions.
Mortgage Contract or Deed of Trust
This document legally puts the buyer’s home up as collateral for the loan. It implies that the lender has full legal rights to take back the property through foreclosure in case the buyer cannot pay up the loan as promised. This is the most important document to any lender. As a buyer, it is imperative to go through it carefully to see that the interest rates and other tiny details align with what had been agreed on with the lender from the start.
Deed of Property Transfer
The deed of property transfer is a formal document that officially gives the buyer rights to the home. Those rights are transferred from the old owner (the seller) to the new owner (the buyer).
The Closing Disclosure
Three days to the closing day, the buyer is presented with a document known as the closing disclosure. The 3-days period gives the buyer ample time to carefully review the closing disclosure to identify any discrepancies before the closing date. It spells out the amount the buyer has to pay upfront as a cheque or wire transfer on closing day: the amount to be paid monthly and the terms of the loan. At the closing table, the buyer goes through this with their attorney (if they have one) and then signs it if all goes well.
Participants at The Closing Table
Depending on the state where participants are found, the closing table may consist of a few people or a full room. Either way, here is a list of people to expect at the closing table during each of the signing. The sellers will sign at one time & the buyers will sign at another.
- The seller is the person transferring ownership of the house.
- The buyer must be present as the deal directly concerns them.
- A title company representative, also known as the closing agent, provides insurance for the property to secure it from claims of ownership by third parties. This is done after the agent goes through the history of the property and finds that there aren’t any unpaid debts and that all ownership transfers were done correctly.
- A real estate agent’s job at the closing table is to curb mistakes and make the buyer and seller go home happy. As required by the government, they perform their fiduciary duty by prioritizing their client’s happiness over theirs.
- Someone from the escrow company to walk the buyer through creating an escrow account for payment of the mortgage.
What to Avoid at The Closing Table?
- Rapidly scanning through the documents before signing them.
- Signing despite not fully understanding the terms.
- Expecting the process to be completed in a few minutes – that isn’t possible.
The closing table is where the most crucial decisions are taken. At this point, the buyer and seller are condemned to the choices they make. There may be glitches and tension in the room, but if the buyer and seller do their homework properly, the events at the closing table will lead to smiling faces and happy hearts.