CLOSING PROCESS
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The closing process is not difficult, but sometimes very time consuming. Whether you are paying
cash or financing your purchase there are certain steps that must be followed to assure that you
are purchasing a property free and clear of any liens, mortgages or defects in title, and that you
understand the terms of your purchase.
Once you have made a commitment to purchase, then a Sales Agreement is prepared for your
review. This is a binding contract. Although most Sales Agreements contain standard language,
there are several things to look for:
1) identity of the property you wish to purchase (address and tax parcel number),
2) purchase price and deposit money (agreed price and down payment),
3) seller assist (where seller agrees to pay a portion of your closing costs), if
applicable,
4) mortgage contingency (contract binding only if the mortgage amount is approved
by your lender), if applicable,
5) mortgage commitment date (you must have a written commitment by this date),
6) last date to settle (closing must occur on or prior to this date),
7) rights to inspections (pest, radon, home inspections, etc.)
8) type of sewer and water (public or private),
9) anything checked off or hand written by the agent,
10) special clauses (additional conditions),
11) default clauses (example: your rights to the deposit if the appraisal is less than the
purchase price; mortgage contingency, etc.),
12) disclosures regarding defects, lead-based paint, etc..
In some cases, a buyer has already been pre-approved by a lender prior to negotiating or entering
into a Sales Agreement to purchase the property. This is a wise approach since you will be
making a financial commitment with a down payment, and it’s always wise to know that a bank
is willing to loan you money.
Once everyone has signed the Sales Agreement, the closing process can begin.
If you are financing your purchase, you will need to provide your lender with a copy of the
signed agreement. This will allow the lender to begin their process and order an appraisal to
assure that there is enough equity to justify the mortgage amount. At this point your realtor will
assist you with any inspections, including termite, radon, septic/water if applicable, and a home
inspection.
If you are not financing your purchase, you should ask your realtor to assist you in ordering an
appraisal and any inspections, including termite, radon, septic/water if applicable, and a home
inspection.
Whether you are paying cash or financing your purchase, you now need to select a closing agent.
If you have not already selected one, your real estate agent and/or your lender can provide you
with a list of approved agents. It’s not a bad idea to contact different agents to find out what fees
are involved.
The closing agent will be responsible for the following:
1) search the courthouse records back more than 60 years on the property,
2) assure that there are no defects, liens or judgments against the property,
3) be sure that any defects, liens or judgments can be cured prior to closing,
4) issue a title commitment or title certificate to your lender (if you are financing)
5) explain your right to purchase Owner’s Title Insurance and the cost (this insures
the title to the property) which can be waived (you are not required to purchase
this),
6) prepare a Settlement Statement disclosing all settlement charges and fees,
7) work closely with the buyer and seller’s real estate agents to assure that all fees
are accurate and properly disclosed on the Settlement Statement
8) work closely with the lender to assure that all fees are in compliance and
accurately disclosed on the Settlement Statement (if you are financing),
9) provide you with a preliminary draft of the Settlement Statement for your review
prior to closing (this is normally accomplished through your Realtor),
10) prepare an accounting to assure that the books balance for disbursement,
11) prepare all disbursement checks and assure the availability of funds for same,
12) attend closing and explain the Settlement Statement and any loan documents, and
assure that you understand everything prior to signing, and assure that you receive
copies of your closing documents,
13) conduct one final search of courthouse records to assure that nothing has changed
since the initial search,
14) record your new deed, mortgage and any other recordable documents applicable
to the transfer, and
15) disburse funds (this includes any funds due to seller).
Once this process is complete, you will receive your recorded deed from the courthouse (this can
take several days), and your closing agent will assure that any Title Insurance Policies and/or
Title Certificates are completed and submitted to the appropriate parties. Once the closing agent
has confirmed that everything is done correctly, the closing process is complete.
Steven F. Smith
Mortgage Settlement Services
107 South Spring Street
Bellefonte, PA 16823
814-357-0515
814-357-0583 fax
mtg.smith@verizon.net
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