You’re Almost Home When You See Your Real Estate Closing Documents

Sometimes during the process of buying a house you may feel like you’ll never see the end of the long, hard road. This is especially true if it’s your first home purchase and you aren’t quite sure what to expect.

Finally the big day arrives and the house is almost yours. The day that the mortgage is signed and you get the keys is known as the closing date. There are actually two parts to closing; the mortgage or loan portion and actually buying the property. Each state has slightly different real estate closing documents (or names of documents) or ways of closing. For instance in some places, the buyer and seller and their attorneys need to all be present at the same place and time for the signing.

Let’s look at some of the standard real estate closing documents. The first group is between the buyer and the lender and pertains to the mortgage.

Truth in Lending (TIL) is required by law from the lender to the you. It shows the interest rate, the annual percentage rate (APR), the total cost of the loan, and the actual amount borrowed.

The itemization of amount financed explains in detail the finance costs. One cost might be points, or the cost of obtaining a lower rate of interest.The detail of what you’ll pay each month is shown in the monthly payment letter. It will give the principal, interest, taxes, and any insurance.

When you sign the note, you’re guaranteeing that you will pay back the amount you borrowed for your home purchase.

The mortgage is another big real estate closing document. It puts a lien against the house meaning that if you default on payments, the lender can foreclose, or take the house back.

Obviously these are all serious documents and not to be taken lightly. We’ll help make sure that you completely understand everything in them before you sign. Also, the real estate agent, attorneys, and seller and you need to go over them very carefully to make sure there are no surprises.

The following real estate closing documents pertain to the purchase of the home:

• The settlement or disclosure statement lists all the actual amounts it cost to finalize the deal.
• The warranty deed lists you, the seller, and describes the house. Sometimes it includes such things as the fact that the seller has the right to sell the property. Once both parties sign this document, the title is transferred to you.
• Proration agreements show how any costs for the house in the month of the sale are to be divided up. For example the seller may have paid the property taxes for the month you’re moving in, in which case you agree to reimburse the seller.
• You and the seller agree to what tax and utilities will be paid by each of you for the month of the property exchange.
• The name affidavit asserts that you really are who you say you are.
• On the acknowledgement of reports you state that you have the seen various inspection reports.
• The title abstract or search gives a listing of every recorded document pertaining to this property. It’s a sort of historical report on the house.
• There are some items that you’ll be asked to pay at the closing. You’ll need to be prepared with a certified check. One item is the closing costs. Sometimes they are paid at this time and sometimes they have been included in the mortgage and amortized over the length of the loan.

If there is a down payment required, you’ll also bring that to the closing. The lender brings the check for the difference for the seller.

If needed, escrow accounts are set up at closing. Escrow accounts are reserve accounts for things like taxes or insurance agreed on before the meeting. The lender holds this money in reserve or escrow for the buyer.

These are most of the real estate closing documents. As mentioned, they may vary somewhat by state. We’ll help familiarize you with everything you need in Arizona. We want you to be comfortable and less anxious about signing so many papers.