Real estate closings can be a difficult thing to navigate, especially for a first time Buyer. But don’t be intimidated! We are here to walk you through the process.
Once you are under contract to purchase your new property, as the Buyer, you get to choose the Escrow Agent/Closing Attorney who will handle your closing. Our firm handles all types of real estate closings from vacant land purchases, new construction, and existing homes to multi-family units and commercial properties. Once you send us the contract for your purchase, our firm will begin to gather information from both you, the Buyer, and from the Seller, so we can begin our title search. If you are financing a portion of the purchase price, your Lender should send us their Title Request so we have your loan information.
The Closing Attorney will conduct a through title search of the property, ensuring that there are no liens or judgments affecting the property and making sure that your property has clean title and legal access to a public roadway. We search for loans (deeds of trust), judgments, easement, Covenants, Conditions, and Restrictions, plats, property taxes, tax liens, bankruptcies, and any other matter that might affect title to the property. We then render a title opinion to the title insurance company, asking them to insure you, the Owner, for the amount of the purchase price. If you have a Lender, we also order title insurance for your Lender in the amount of the loan. Your title insurance protects you, and your Lender, from anyone ever coming forward claiming superior title. Your title insurance policy does not expire, and you only pay the premium once, at closing.
The title insurance company issues a Title Commitment based upon the attorney’s title opinion. This is a promise to provide title insurance to the Buyer (and Lender, if any) upon satisfaction certain requirements at closing. Such requirements generally include things like the recording of the deed from Seller to Buyer, making sure the Seller’s loan is paid off, and paying any outstanding liens, judgments, or property taxes, as well as collecting and paying to the title company the insurance premium.
Once we have the title commitment, we send this to your Lender. The Lender’s underwriters will review the title commitment with respect to your loan. Once you have provided any documentation your Lender requests from you regarding your income, proof of employment, taxes, etc., the underwriter should give approval for the loan and move your file to a Closer.
The Closer will communicate with the Closing Attorney to draft a settlement statement for your closing. Your settlement statement will detail the entire transaction including your purchase price, loan amount, any deposits you have made, and your loan and closing costs. Once the Closing Attorney and the Closer have finalized the settlement statement, the Closing Attorney will send you a copy, along with wiring instructions so that you can wire your “Cash to Close” or “Cash Due from Borrower.” This is the total amount you will need to wire for the closing. It is best to wire your funds the day before closing, if possible, as wire transfers are not instantaneous. The funds can take minutes, up to several hours, in order to reach the Closing Attorney’s trust account.
On closing day, you and your spouse should bring a government issued photo ID such as a driver’s license or passport. Your identification must be current (not expired) in order for the notary to notarize your loan documents. In most cases, you will be signing a loan package of 80-120 pages, so be prepared to sign your name many, many times! Always be sure to sign your name exactly as it appears on the signature line of each document. Your Closing Attorney should be able to explain your loan documents to you and answer any questions you might have as you go along.
Once your loan package is signed, the Closing Attorney will provide you with a copy of all of the loan documents. You are free to go, but your closing is not yet complete! The Closing Attorney will need to send scans of your loan documents to your lender for funding approval. Once the documents are approved, your lender will wire your loan funds to the Closing Attorney.
Once the Closing Attorney has funding approval and has received all funds (Buyer funds and Lender funds), we can record your deed and new loan. Depending on the county in which your property is located, recording can take anywhere from minutes to a few hours. Once all of the legal documents have recorded, we will notify your real estate agent that the closing has been completed. Congratulations! You now own your new property and your realtor should be able to facilitate the exchange of keys for the property.
One common misconception is that you will receive a paper copy of the deed from the Seller and that you need to store it in a safe place as proof that you own the property. This is not the case. Once the deed is recorded it becomes public record, available to everyone.
Finally, the title insurance company will send you a copy of your title insurance policy once it has been issued. This doesn’t always happen immediately after closing. Remember, we said that the Closing Attorney has to fulfill all requirements of the title company in order to obtain the final title policies. That means making sure that the Seller’s lender satisfies their lien of record. Lenders have up to 90 days after receiving their payoff to record a satisfaction, so this may mean it is several months before your title insurance policy can be issued. It doesn’t mean there is anything wrong. It just means your Closing Attorney is doing their job and making sure that you have clean title, free of liens and encumbrances.
As always, don’t hesitate to reach out to our firm if you have any questions regarding the closing process. We will be there every step of the way to ensure your closing goes as smoothly as possible!