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We spoke with local real estate closing attorney about what you need to know about preparing for your real estate closing.
Hopefully, this advice will demystify the process for you.
Preparing for Your Real Estate Closing
The number one thing you need to know about preparing for your closing is that communication is key. You need to communicate with the other party, your agent, and your closing attorney.
It does not matter whether you are a buyer or seller. Whether this is your first transaction, or if you have done several.
It is never too early to ask questions, provide requested information, and communicate.
If You are the Purchaser ...
Make sure you fulfill all of your lender's preliminary requirements.
And stay in touch with your lender and closing attorney throughout the process. The number one reason for closings to be delayed os because the closing attorney did not receive all required documentation, and they found out at the last minute.
Homeowner's Insurance Policy
Your lender will require that you have homeowner's liability insurance. That policy will need to have an effective date on or before the closing date.
Make arrangements to have your funds wired to your attorney's escrow account prior to the closing.
Usually, your lender or closing attorney will be able to provide you an exact amount the day before closing. If not, your lender will be able to provide you an estimate. And any difference can be made up at closing.
A survey allows you to find potential defects in title, such as an encroachment onto your property by a neighbors fence.
Surveys are not required in all states. However, you are strongly encouraged to get a survey regardless.
Title insurance is a contract where a title insurance company agrees to indemnify you against your losses sustained as a result of a defect in title.
While it is expensive, title insurance can save you thousands of dollars or more if there has been some mistake in title not revealed by your closing attorney's title search.
What If You Cannot Attend the Closing?
Inform your closing attorney as soon as possible, if you will not be able to attend the closing in person.
If that is the case, there are a couple of solutions:
- Power of Attorney. Your closing attorney will have you execute a form naming an agent who can attend the closing and sign the documents on your behalf.
- Mail-Away. Your closing attorney can arrange to send the documents to an attorney or title insurance company in your area to assist with document execution.
Buyer Information Form
Make sure you promptly complete the buyer information form provided by your attorney.
If Your Are the Seller ...
Provide your closing attorney with all documentation of repairs and the satisfaction of other contractual obligations.
And make sure the closing attorney receives a copy of any contract amendment.
Seller Information Form
Make sure you promptly complete the seller information form provided by your attorney.
This form includes a lot of information necessary to complete the transaction, including:
- Loan payoff information;
- Homeowner's association information; and
- Copies of existing title policy.
Receiving Your Funds
Provide the closing attorney with your wiring instructions. This way, your proceeds can be wired directly into your account.
Who wants the hassle of a check? And who wants to wait several business days before your bank clears the entire amount of the check?
Now you are prepared for your real estate closing.
But that does not mean you may still not have some questions. For instance, you may be curious about several fees shown on the closing statement.
That is what the closing attorney is there for: to answer those questions for you. After all, communication is key.