Real estate closings could be quite simple at one end of the spectrum or very difficult at the other end. In most cases, you will need to understand the legal ramifications of signing several documents, including the note, mortgage, transfer of title, mineral rights, title insurance, and tax documents. If your closing is complicated, you should always have an attorney present.
It is very rare to have a simple closing, but it could happen. If you are buying raw land for cash, the closing is usually quite simple for the buyer and seller. You don’t need a mortgage, but you will need title insurance for yourself. You’ll also need a deed. The seller will need to sign the requisite tax documents.
Another simple closing is when you purchase a manufactured or modular home and put it on land that you already own. The closing, even with a mortgage, is easy and between the buyer and home manufacturer. However, if you need a construction loan while the home is being built and/or set up, the closing becomes more complicated since you must close twice. The first closing is the construction loan on the money you borrow for the home. The second loan is the loan that covers the finished product. Closing with a builder of a home that is built on-site is more complicated than closing on a manufactured or modular home.
Closings Gone Wrong
While no one wants to have a closing go wrong, it does happen. Your lawyer might find mistakes in documents, including the loan estimate. You might find that the seller did not disclose pertinent information about the home – information that would have prevented you from making an offer on a home and could be caused to break the contract without prejudice. It is always better to have a real estate lawyer review the documents prior to closing and at the closing to ensure that your best interests are met.
List of Closing Documents
At the closing, you will have to review and sign most of these documents:
Closing disclosure dictates the terms of your loan and the closing costs you will pay.
Your loan application. You must sign a new copy of the application you submitted to the mortgage company, so be sure to review it and make sure everything is correct.
The mortgage note that binds you to repay the loan should have the amount you borrowed, the interest rate, the payment date, the amount you will pay over the life of the loan, the length of the loan, and other information.
The mortgage or deed of trust is what provides security for the loan. When you sign this document, you are putting your house up as collateral. If you bought land separately, the lender might also use the land as collateral.
The title and/or deed to your home. The deed is proof of ownership.
Affidavits, depending on your situation.
Escrow disclosure tells you how much of your payment goes to escrow and what the escrow is used for. It is usually for county taxes and homeowner’s insurance.
Property transfer tax documents.
When scheduling your closing, even if your real estate agent is using a closing agent, consider having your own attorney present. It could save you a lot of headaches and heartache if the lawyer catches something amiss with the closing.