7 Steps to a Stress-free Home Closing

By: G. M. Filisko

By doing homework in advance, you’ll understand what you’re asked to sign when you close the sale of your home.

1. Set a closing date

Your real estate agent will work with the seller’s agent and title company to schedule your closing date. Be sure it meshes with the end of your lease or the sale of your existing home and a time when you’ll able to play hooky from work. If you’re tight on cash, schedule your closing for the end of the month because that’s when you’ll have to pay the least amount of interest at the closing table.

2. Gather your funds

You may be required to bring funds to the closing. If they’re not easily accessible, arrange early to transfer them to a liquid account to avoid last-minute problems. If the title company requires the funds in the form of a cashier’s check, also leave time to stop by the bank and pick one up.

3. Purchase title insurance

Title insurance protects the policyholder against trouble with a home’s title. Your lender will insist that you purchase a policy to protect it. You should also consider purchasing what’s called an owner’s title policy from the same insurer, which protects you from fraudulent claims against your ownership and errors in earlier sales. In some areas, sellers traditionally pay for the buyer’s title policy. Shop online at Closing.com, EasyTitleQuote.com, and FreeTitleQuote.com. If your home has been sold within the past few years, ask the prior owner’s insurance company for a reissue discount.

4. Line up homeowners insurance

Get quotes and compare policies to be sure coverage will be in effect by your closing date. An annual policy should run $500-$1,000, depending on your home’s size, age, and amenities. If you live in an area where natural disasters occur, like earthquakes, floods, or hurricanes, you’ll need separate insurance to protect your home.

5. Review your good-faith estimate and HUD-1 settlement sheet

Your lender must provide a good-faith estimate of your closing fees. Some of those fees can’t change, and others can rise by 10%. Before you go to the closing, read your good-faith estimate, compare it with your HUD-1 settlement statement, and question any fees that increased.

6. Do a walk-through

Schedule an appointment to walk through the home one last time just before your closing. Make sure repairs you requested have been made, no major changes have occurred since you last viewed the property, and that the sellers left anything they agreed to leave and took all their belongings.

Also test electronics and appliances, such as the doorbell, dishwasher, washer and dryer, and oven, to ensure they’re functioning properly. Do the same with the hot water heater and heating and air conditioning systems. Walk the yard to be sure no plants or shrubs have been removed.

7. Resolve issues identified in your walk-through

If your walk-through uncovers problems, you can delay the closing until the seller corrects them. But that’s often not feasible because your lease is probably over and you’ve already scheduled movers. Another option is to negotiate a discount to your sales price to cover the cost of the work needed. If the air conditioning is on the fritz and a contractor says the repair will cost $500, ask that the sales price be reduced by that amount. If you make that request at closing, however, be ready for a delay while the title company redoes the paperwork.

A third option: Have the title company hold a portion of the seller’s proceeds in escrow until the dispute is resolved. Once that happens, the funds will be released to you or the seller, depending on the outcome.

G.M. Filisko is an attorney and award-winning writer who has endured several property closings, but the easiest was done through the mail. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

5 THINGS EVERY HOME BUYER SHOULD KNOW

Most buyers know the basics of a real estate transaction; the information directly affecting their situation such as mortgage payments, closing costs, commission and so on. Most feel confident in their choice of houses and may have put some time into researching the area and schools, but there are a few things that catch many people off guard. These details often appear at the last minute and the buyer is aware then details usually cannot be changed and the results can often cause delays and or loss of funds. Here's 5 of them:

1. Your Initial Deposit: When you made an offer to purchase, this included a good faith deposit. This deposit is also called "earnest money." This deposit is held in escrow until the close and is credited to the buyers closing costs. But, if escrow gets cancelled what happens to the deposit? Most people are unclear about the disposition of their deposit; sellers assume the deposit is automatically theirs if the buyer cancels but this may not be the case. It's best to find out how this process works and what is needed in order for the buyer to recoup their deposit or what details constitute the forfeiture of the buyers’ deposit. This is often spelled out in the initial offer, so ask Team Patereau to explain the process.



2. Taxes: Most people are aware of their tax rate, but have never calculated what the actual yearly amount will be. Something else to consider, if you purchase a new home from a builder you're going to receive a supplemental bill shortly after the close of escrow. This supplemental bill will be equivalent to one year's worth of property tax. This is a shock to many people, since most people never know its coming. Another little detail that often slips through the cracks are assessments. Newer communities likely have assessments in addition to your basic property tax rate. Many people don't know that often assessments can change and be added yearly, which equates to higher property taxes every year.



3. Homeowners Association: When considering a home within a homeowner's association, it's always prudent to thoroughly read all the Covenants, Conditions and Restrictions (CC&R). Yes, this is often a huge document, but it's given to you before you close escrow for a reason; these CC&Rs directly affect you. If you don't know and understand all the rules, this can lead to a less than ideal situation if you unwittingly break a few. Little things like permission to paint your garage door or installation of a backyard patio can lead to huge problems including legal action. Know the rules!



4. Home Warranty: Understanding how your home warranty works will save you a tremendous amount of frustration and hassle. Research before you close escrow, find a plan you understand and feel comfortable with, then request any extra coverage you think you need. Most home warranty companies offer basic coverage for appliances and air conditioning but, did you know they also offer coverage, for an additional fee, for such items as roof, well, and septic tanks?



5. Homeowner's Insurance: Of course everyone knows they need homeowner's insurance before closing escrow. Unfortunately most people wait till the last minute, run into snags, and then closing is delayed. If you approach this task as soon as you enter escrow this allows time to compare rates and if a snag does arise you have time to handle it, avoiding a hasty decision. If the previous homeowner has had a recent claim this can affect you the new purchaser. Better to know this early rather than the last minute.
   
   

Ask your Team Patereau to help you understand the details that are a part of every real estate transaction and you'll enjoy smooth sailing every step of the way!