Closing can be one the most
confusing aspects of buying a home or refinancing
a loan. The process begins with your bid, the sales
agreement and your loan application. It ends the
day of closing when all of the necessary documents
are reviewed and signed, and corresponding fees
are paid. Usually, it takes between 60 to 90 days
to complete the closing process.
Several parties are involved in the closing process.
In addition to you and the seller, including attorneys
and mortgage and title company representatives.
Your attorney will coordinate with each participant
to choose a closing date. Keep in mind that it takes
time to gather all of the documentation, and if
the paperwork is not completed on schedule, it is
possible that the closing date can change. This
uncertainty can be particularly stressful for buyers
who are also selling a home, since the closing date
generally dictates moving arrangements.
For your closing, you will need to be prepared with
photo proof of identification for each buyer, your
new homeowner’s policy, as well as various
other documents which your attorney will advise
you of, and don’t forget your checkbook! The
closing is where most fees are settled.
The Real Estate Settlement Procedures Act (RESPA)
governs the loan application and closing process.
RESPA ensures that homebuyers receive timely notification
of closing and other costs. It is also a good idea
to review a copy of “Settlement Costs- A HUD
Guide.” If you haven’t already received
a copy from your lender, call your local HUD office
to request a free copy.
Real estate practices and closing costs vary widely
in different areas of the country, and from lender
to lender. However, buyers and sellers are free
to negotiate certain fees. It’s best to do
your research before you make any offers, so you’re
in the best position to negotiate with the seller.
In most states, you can also cut costs by shopping
around for providers of settlement services.
Generally you can plan to spend an additional 3
to 5 percent of the loan amount in settlement expenses
(for example, $3,000. to $5,000. on a $100,000 mortgage).
In higher-tax areas, 5 to 6 percent is more realistic.
The exact figure depends upon the location of the
property you are purchasing.
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