Three Things to Know About Closing

Note:  This is a chapter in my new ebook called The Ultimate Guide to Buying (and then Selling) Your First Home.  I will post a chapter a week.  If you like what you read, you can pick up a copy here for the price of a candy bar!   Buy a candy bar or be a real estate guru!   This chapter goes over the final task of closing when buying a house.  The last chapter to be shared on this blog you can find here.

“Congratulations!”   I exclaimed to Steve when he picked up the phone.  “You have made it all the way to closing. After all the hard work, you are going to be getting the keys of your new home.  Closing time has arrived.  ” What exactly is closing?  Steve asked.  He knew closing was when all the process came to an end, but wanted to know something about what to expect.   I replied. “Closing is the process of you signing all the paperwork needed to complete the purchase of you home.   The escrow agents will have all the documents prepared beforehand by reviewing the purchase contract and supporting documents. All fees are paid at closing including title searches, taxes and other closing costs such as any outstanding liens.”

 I went on to warn Steve that sometimes things can go sideways at closing.  Financing might fall through.  The seller might decide at the last moment to not go with the sale.   Internet goes down.   Storm rolls through.   All these situations are rare, but they do occur from time to time.   However, most of the time, when you reach the closing table, you have reached the point where you finally get your home. I then told Steve about what to expect after the Title company gives him a date and time to sign the closing documents at the title company’s offices.   Your seller has received the same notification.  I continued.  “Once at the table, most find the actual signing of documents a mixed bag of emotions.   You are excited because the long process is finally come to an end and nervous about signing legal documents. For the most part, however, closing is a time of satisfaction and relief.    Get a good night sleep the night before and eat a good meal before heading over the title company.   It can be a lengthy process, so you need to be fully alert and not be distracted by a grumbling stomach.”  I then told him about three things to remember about closing.

1. Don’t forget these items – “Since you are buying something, you will need to bring money to pay for the house. “I told Steve.  He laughed and asked if that was not obvious.    I replied “Yes.  I know this seems straightforward and obvious.  However, sometimes buyers are so busy getting ready for the move and dreaming about their new home.  They totally miss the fact that they must have money to take to closing.   The title company will let you, or your agent, know what you need to bring in terms of the amount.  You will need to get a cashier’s check as cash or check does not cut it at a title office.”  Steve acknowledged this fact from me.  He said again, this should be obvious.  I replied.   “Believe it or not, some people in the past have tried to bring cash to closing to the tune of thousands of dollars.  To say the least, no one wants to drive round with that much money.  Cash is not allowed.”  I did then tell Steve that checks can sometimes be used to make up a difference between the cashier’s check and the actual amount due, which cannot be communicated incorrectly at times.  I finished.  “Please also do not forget to bring identification, such as a driver’s license, as the title company will need to make copies.    Finally, don’t forget to bring some hand strength with you.  You will sign a lot of paperwork for 60 to 90 minutes.   Mortgage companies like to make you work for it until the end. “

2. When do you get possession of the house? –  I asked Steve if he knew when he got possession of the house.   Steve replied with “All the paperwork has been signed.  You get the keys, now right?”    I told Steve that this is not always the case. Why? It depends on several factors. “First, when are you closing on the home? Is it 5 pm Friday afternoon? If this is the case, some lenders might not fund it until the following business day. “When are your sellers signing the paperwork? I told Steve.  “If the sellers are closing after you do, you will not possession because most lenders will need everything squared away before releasing funds, and some title company requires funding to be complete before handing you the keys.”   Why would there be a delay in funding? Steve asked.   I responded.  “Some banks might delay funding for various hiccups in the system, or some technical issue can arise. Be assured if all is good with the paperwork and both parties have signed, you will get your keys and be able to take possession of your new home.  You just might not walk out the door with the keys in your pocket.”

3. Closing is not the end –  I started this last thing with a little-known fact.  “You might think closing is the end of the process when buying your home. It can be if everything goes according to plan and you are happy with everything. However, this is usually not the case. The first item to understand is that sales contracts are perpetual in nature and continue past the transfer of ownership.”   Why is this important?  Steve asked.  “It can be if something is not to your satisfaction. For example, the repair the seller did was not performed up to your expectations. You might have to ask the seller to provide further funds to make the repair right. There are other more minor items that often come up in the sale of a home. For example, the seller might leave some property behind that you don’t want, and must come back by to get it.   Some sellers get in a hurry and leave trash on the curbside for pickup that never gets picked up. Or, you could have a question about some feature of the home.”  I told Steve that you can expect to continue to have interactions with the sellers for some days or weeks after the sale.  I finished by saying.  “It is for this reason to always keep the seller on good terms.  It is never a good idea to burn a bridge, especially one that might still owe you some of their time and resources. When I was done, Steve thanked me for my time and guidance during this process.  I told him I would see him at closing.   Closing took place soon after this phone conversation.  As I expected, Steve and Sally were nervous about signing the paperwork and taking this large step in their lives.  I helped a little by showing up with a housewarming present.  Sally was especially excited with the towels and blankets I gave them.   We got the keys when they were done signing since the sellers had signed earlier and funding went through without a hitch.   Steve was smiling from ear to ear and Sally gave me a huge hug for my help.   I told them if they needed anything else, to just call me.    I saw later that week that I had received some good reviews from them on a national site, which all agents welcome from satisfied customers.

Closing is an end and a beginning.   It is the end of buying your first home as you have done all that is necessary for you to get your first home well in hand.   It is the beginning of you enjoying some fruitful years in your new home.   Be happy.  You made it!