Closing Process | Closing Documents
THE FOLLOWING IS AN OUTLINE OF THE CLOSING PROCESS. THIS INFORMATION IS VERY IMPORTANT AND WILL ANSWER MANY QUESTIONS YOU MAY HAVE. WE HOPE THIS INFORMATION IS HELPFUL TO YOU AND PLEASE DO NOT HESITATE TO CONTACT US FOR ANY REASON.
STEP ONE: (1-10 DAYS)
Contracts signed – Copies will be mailed by the Title Company or delivered by realtor to the buyer and seller. Seller’s Disclosure is signed by the buyer – copies delivered by realtor. All paperwork will be forwarded to the Title Company and Mortgage Company, as well as the Earnest Money check will be deposited at the title company. The option fee check will be collected from the buyer and sent to the seller. (The Earnest Money and option fee is credited to the Buyer at closing). We will provide you with a list of deadlines that need to be followed in accordance to the contract. We will help you follow these and, for the buyer, we will fax the same deadline list to the lender to help the lender be aware of approval deadlines.
Buyer’s select home inspector – The property inspection must be completed within the framework of the contract (usually 7-10 days). Inspections and any repair estimates are paid by the buyer. This also includes a termite inspection which is often needed by a buyer’s mortgage company. It is important that the buyer be present at the end of the inspections to listen to the final report. The final written report may be as long as 15 pages and will cover all major items of a home. For example, the inspector should inspect the roof, foundation, electrical, heat/air, plumbing and pool.
The inspection and bids or estimates for repairs need to be completed prior to the “inspection period or option period” of the contract. If a buyer needs bids and estimates, the buyer should contact professionals in that field immediately to look at the repair and it is important that the buyer communicate with this professional to understand the extent of the repair.
The buyer has the right to terminate for any reason in this time frame of the option period, and it is important that this deadline date be observed. The intent of this time period is to allow the buyer to make a sound and comfortable decision to purchase or not purchase the home.
The inspection report should not be used as a punch list for repairs for the seller, but major repairs such as foundation or roof repairs may be a reason to renegotiate. Remember that if any renegotiating takes place, it needs to be resolved prior to the end of the inspection period.
A seller should make any repairs they know of prior to the inspection. It is always a good idea for the seller to have the Heat and Air Conditioner serviced with a good cleaning, changing filters, etc. If the buyer will lose his/her option fee to the seller, but the buyer is entitled to their earnest money.
Buyer makes formal loan application – the quicker the initial paper work is provided to the lender, the quicker the processing will be able to be completed. The buyer should make sure they provide all the necessary documents to their lender as soon as they are requested so that the loan approval process can go quickly and smoothly. The buyer’s lender should provide a “Good Faith Estimate” to the buyer that shows all of the buyers closing costs.
STEP TWO: (10 Days – 3 Weeks)
The inspection period should be close to completion.
The buyers loan should be in processing. The appraisal is usually done during the second or third week after loan application. The appraiser usually takes a week to get a copy to the mortgage company. After two weeks some of the buyer’s verification should be coming in. After 2-3 weeks second notices from the mortgage company will be requested for those items not yet received from the buyer that the mortgage company may need. Buyers, please tell your lender to have documents to the title company at least 4 days prior to closing! This will ensure the buyer enough time to review the lender’s charges, and to get a cashier’ check from the bank.
The buyer should be checking into insurance companies and getting quotes from several different companies at this time. The title company will need to have a policy in hand for closing. We will be checking on a regular basis with the mortgage company on all progress. Buyers should have their insurance companies contact the title company.
Please keep in mind that the home you are buying or selling will continue to be marketed during this time until all contingencies are removed. For example, a contract pending sign is usually not placed on the sign until all the inspections are worked out and until the buyer receives financing approval. However, it must always be disclosed up front that there is a contract on a home to any buyers or their agents if they are considering showing the property. Usually open houses are not conducted when a home is under contract.
STEP THREE: (3-4 Weeks)
The loan approval should be getting very close.
Utility Transfer: You will want to make sure utilities are transferred. This has to be ordered by both parties at a mutually agreed upon date. We do not want utilities disconnected, but rather transferred. We will provide you with a list of utility companies and their phone numbers to better assist you.
STEP FOUR: (A few days prior to estimated closing date.)
Document Preparation: Once the loan has been approved, the mortgage company will issue to the title company their instructions for exactly what and how the documents must be prepared. We always push the mortgage company to get their documents to the title company as soon as possible, so nothing is “last minute”, but often the mortgage companies can get backed up and may not send their documents until the day before closing.
As soon as the title company receives this they will prepare a document that breaks down all the costs (Called HUD 1) that they will fax this to you. If you feel information is confidential, you will need to coordinate with the title company a time where you can catch the incoming fax. We will then review this and make sure that all the numbers are as exactly as the lender or we have outlined for you. Feel free to call your closer at the title company for any questions regarding taxes, title policy, survey or title fee information.
Someone from the East Coast Closing & Title will usually be closing with you (unless you are out-of-town and close by Fed-Ex). Please note that if you are out-of-town for a closing, the title company will charge you any Federal Express fees incurred and you will need a notary present at the time the documents are signed.
As a seller, you will receive a check for the amount owed to you by the Title Company, after the buyer has signed the necessary closing papers, and the money has been funded. As a seller, we can arrange to have funds wired to your account we will just need wiring instructions. Keep in mind that funding can often take several hours after all parties have signed, and sellers will not receive a check until then.
As a buyer, you will need to bring to closing a cashier’s check made out to the title company for the exact amount that was designated at the bottom of the HUD1. Make sure to bring your driver’s license to the Title Company, for they will need it for identification.
As a Buyer, you may be signing as many as 50 legal-sized documents and closings usually last an hour or an hour and a half. If you wish to read through each document carefully prior to closing, please let East Coast Closing & Title know so we can courier them to you before closing. If a second lien is involved, the amount of documents to sign will increase for the Borrower.
The Seller will not have as many documents to sign and the closing usually lasts 30 minutes to an hour. After you have signed all the papers, the “package” will be fully notarized and forwarded to the mortgage company to fund the home loan. Every mortgage company has different “funding” deadlines…most are before noon…the buyers are usually scheduled for closing as early as possible in the morning and the sellers a little later. Sometimes this is not possible, but the title company, mortgage company and the realtors will do everything in our power to see that we close in a timely fashion.
The sellers will come in and sign a few documents for their side, often sellers do not receive a cashiers check immediately after signing. Signed documents must be faxed to the mortgage company for proof of sale and then the check can be cut, this can take several hours. The current mortgage and any taxes due will be collected for and paid out by the title company. If the seller will be remaining in the house and rent is to be paid, this will be collected and held by the title company.
We will furnish to the buyers a key at the time of closing or funding. Sellers, please leave all additional keys and garage door openers in the kitchen as you leave the house. It is our hope that all sellers will be courteous and leave the house clean for the new owners. It would be nice to have the yard cut also if needed. The buyers would appreciate any manuals explaining appliance use and care as well as warranties. If you have paint or wallpaper samples or floor plans these are always helpful! It is our hope that the Golden Rule will be used by all and that each parties move will be happy even if it is exhausting!
This has been prepared to help buyers and sellers feel more comfortable with what to expect and when, during the process of selling or purchasing a home.