Real Estate Questions Answered Here
by Art Santellen, REALTOR®
Note: This is the 11th and final installment of a special
series of 11 columns I'm writing to teach you everything you need to know about
buying a home and getting yourself ready to buy a home. This week, I'll tell you
about step #10 - The Closing.
Stop #10 - The Closing
It's been a long and difficult process. Before I get into
the closing, I'd like to share a couple of thoughts with you about what happens
just before the closing.
By this time, hopefully, all the documents and letters have
been submitted to the mortgage company. A fairly thick stack of documents have
accumulated and is called the "loan package". This loan package is
sent by the mortgage loan officer to his or her boss for review. Then, it's
shipped via overnight mail to a loan underwriter.
The loan underwriter is the check maker's personal
representative. He or she is the final authority on whether the loan should be
approved or not. An underwriter reviews every document....every document. Their
job is to be the last person to double check every part of the loan before the
investor (the guy or company with the money) writes the check so you can buy
Once we get underwriter approval, the mortgage loan
officer's loan processor prepares financial data and sends it to the loan
closer. In our community, this person is most often a closer hired by the title
insurance company. Their job is to make sure all the real paperwork is ready for
signatures. One of these 50 or so documents is the Settlement Sheet. It shows
the purchase price, loan amount, fees that need to be paid, and amounts that
need to be placed in an escrow account for future disbursement (like taxes and
insurance). The Realtor's job is make a final review of all the arithmetic and
certify with his/her signature that everything's accurate. In my practice, I
find an error in about 10% of the settlement sheets I review.
Both buyer and seller meet at the closing office. Again, in
our community this is usually the title insurance company's office. Besides the
buyer and seller, the others present include both Realtors, and sometimes the
mortgage loan officer. Sometimes, an attorney or two will be present. Some real
estate transactions include assistance from the city, county or a non-profit
organization. In those instances, representatives from each organization is also
present. It's OK to bring kids but not encouraged.
The real estate closing is really two closing rolled into
one. One closing is aimed at closing the real estate contract. It requires both
buyer and seller to certify that the property being purchased is clearly
identified. It also includes certification that ownership of everything that was
included in the deal is being passed to a new owner. You know, things like
refrigerators, washers and dryers, hot tubs, and swing sets. The seller
certifies that ownership of these items is being passed without any strings. The
buyer certifies that the physical condition of everything is satisfactory.
Sorry, cleaning the oven is usually not part of the deal.
The second closing is the loan closing. In this closing,
the buyer certifies that they still have a job and have certified funds to close
the deal. In addition, the buyer signs several documents which place a lien on
the property if it is to be used as collateral for the home loan. The buyer also
signs what amounts to a promissory note that the mortgage company can foreclose
on their home if they fail to make their monthly mortgage payments.
After all this reading and signing, money is passed around.
The buyer gives the closer a certified check for their down payment and closing
costs. The seller (usually) gets a certified check for the equity in their
property less their closing costs. The Realtors get a check for professional
services rendered. Once in a while other checks will be prepared by the title
company closer to pay other people. Attorney's fees, buyer creditors, seller
creditors, and other folks, for example.
The buyer then gets the keys to their new home. From that
moment, the buyer is the new owner of the house and they can move-in!
Whew! That was a lot of work! No wonder Realtors get such
big pay checks....we earn every dollar.
Next week: agencies that can help you buy your first home.
The following week: documented evidence why people are going crazy over the
price of homes in Colorado Springs.
NOTE: As you can see, I really do get questions from the public. To add your question to this list, please send them to me at the address listed below. Thanks.
The answers to these, and other fascinating real estate questions will be answered here, in Hispania News, next week.
When you're ready to buy or sell a home, see a REALTOR®
Art is a REALTOR® with Heritage Realtors in Colorado Springs.
If you have a real estate question you’d like answered, please send them to:
Art Santellen, care of Hispania News
PO Box 15116
Colorado Springs, CO 80935