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Buying or selling a home (or other piece of real property)
usually involves the transfer of large sums of money. It is
imperative that the transfer of these funds and related
documents from one party to another be handled in a neutral,
secure and knowledgeable manner. For the protection of
buyer, seller and lender, the closing process was developed.
As a buyer or seller, you want to be certain all conditions
of sale have been met before property and money change
hands. The technical definition of a "closing" is a
transaction where one party engaged in the sale, transfer or
lease of real or personal property with another person
delivers a written instrument, money or other items of value
to a neutral third person, called a title company. This
third person, or title company, collects and disburses funds
upon the happening of a specified event or the performance
of a specified condition.
Simply stated, the title company impartially carries out the
written instructions given by the principals. This includes
receiving funds and documents necessary to comply with those
instructions, completing or obtaining required forms and
handling final delivery of all items to the proper parties
upon the successful completion of the sale.
Once you apply and are approved for a mortgage after having
provided your lender with all related documents (paycheck
stubs, checking and savings account statements, income tax
returns, etc), the lender will then contact the title
company, normally of the buyer's choosing, and provide
"instructions" to the title company. These instructions will
include the terms of the sale, collection of items such as
paid homeowner's insurance policies and paid receipts,
pro-rated taxes, commissions, seller-assisted closing costs
and other items to be paid at the closing by the buyer or
from the sellers' proceeds. The title company then prepares
a preliminary statement of all related collections and
disbursements and provides to the buyer and the seller the
day before closing to ensure all debits/credits are
reflected correctly.
When all the instructions from the lender have been met, the
closing can then take place. All outstanding funds are
collected and fees (such as title insurance premiums, real
estate commissions) are paid. Title to the property is then
transferred under the terms of the closing instructions and
appropriate title insurance is issued.
Payment of funds at the closing by the buyer's should be in
the form of a certified or cashier's check made out to the
buyer and endorsed over at the closing to the title company.
Personal checks are not acceptable, unless there is a last
minute adjustment made to the closing statement and a check
for funds less than $500 is needed to correct any errors.
Check with your title company regarding their policy. |
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