Welcome back to Homebuying 101. If you are just now joining us, you can read on about closing below or catch up on previous installments.
The closing, also known as settlement or escrow, is considered the final step in purchasing a home. But many first-time homebuyers aren't sure what to expect when they get to the closing table. You might be asking why sometimes it can take a while to close, who are the key players and what does a title company do? We'll answer these questions and more below.
Who Comes to a Closing?
The amount of people and nature of the closing will depend on various factors, but these are some of the most common people you can expect to see at closing:
- The buyer (yourself) and your real estate agent. The buyer and any co-borrowers must attend the closing in person to sign documents. Your real estate agent doesn't have to attend closing, but they often do to make sure everything goes smoothly.
- The seller and/or their real estate agent. The seller may, but does not always need to attend the closing in person. They sometimes will pre-sign documents or give power of attorney to their lawyer to sign on their behalf.
- A closing agent or escrow officer. Depending on state laws, an escrow officer, closing agent or both will be present to handle the legal transfer of funds and property ownership.
- A representative from the lender. A loan officer will attend to provide the mortgage loan to finance the home purchase.
- A title attorney. In some states, a title attorney is required to legally transfer the title of the home.
What Does a Title Company Do?
A title company plays a crucial role in the closing process by conducting a title search to verify the property's ownership history and identify any liens or encumbrances. This helps ensure that the title is clear and transferable to the new owner.
Additionally, the title company issues title insurance policies to protect both the lender and the buyer against any defects in the title that may arise after the purchase. Title insurance provides peace of mind by covering legal expenses and financial losses resulting from title disputes or discrepancies.
Why can it take a while?
Closing is a complex process, and the timeline can vary vastly from sale to sale. One common reason for delays is the need to address any outstanding issues uncovered during the final walkthrough or the title search process. These issues could range from unresolved repairs to discrepancies in the property title.
Coordinating schedules among all parties involved, including buyers, sellers, real estate agents, lenders and closing agents, can also sometimes contribute to delays.
The closing day itself typically takes between 1 to 2 hours. This includes document reviews and signing, wire transfers, recording and filing paperwork and quality control measures made by attorneys, title companies and lenders.
What Should You Expect?
Once you're at the closing table, you'll be presented with numerous documents awaiting your signature. You will need to sign documents related to both the purchase agreement and the mortgage agreement. Take your time and review each document carefully.
Additionally, you'll be required to pay closing costs, which encompass various fees associated with the home purchase. These may include appraisal fees, attorney fees, title insurance and property taxes.
You'll start by signing all of the necessary documents. Then the deed is transferred, funds are sent and records are filed. At the end of closing, you'll be handed a closing package. This will include copies of important documents, the deed, keys and anything else you need for your new home.
Congratulations! You are now a homeowner. In the next installment of Homebuying 101, we'll cover everything that happens after you get the keys.
