06/18

What’s A Closing? – A Homebuyer Guide

You searched for months on Zillow, you hired a real estate agent to guide you through the homebuying process, and now – closing time.

Except….what is a closing, anyway?

We get lots of questions like this all the time. But essentially – the closing (or the settlement, as it can be called in some states) is the important part of the purchasing process. This is the stage you legally commit to your mortgage loan.

Title insurance – an Owner’s Policy – protects your property rights. This one-time fee protects your important property rights for as long as you or your heirs own the property. Without title insurance, real-life title problems could affect your property rights.

Owner’s Policy protects you from:

• Unpaid mortgages
• Unpaid property taxes
• Child support liens
• Missing heirs who could claim the property belongs to him or her
• Missed easements or rights of way that could limit your use of the property

Here’s what you can expect when you go to your title & escrow office for your closing:

• Talk with your real estate agent on where to “shop” for the closing agent who will gather all your legal documents, close the loan, and handle the money involved in your purchase (ahem, us!)
• During the closing, you’ll sign many documents. Some of the documents you’ll sign include:
  • Closing Disclosure: This contains the terms and cost of your transaction. Your lender, by law, must provide the Closing Disclosure to you three days before your closing appointment.
  • Promissory Note: This is your promise to repay the mortgage to your lender. It details the amount you owe, the interest rate, the dates when payments are to be made, the length of time for repayment, and where the payments will be sent. It also details consequences if you fail to make payments.
  • Deed of trust: Also called a Security Instrument or Mortgage, this document transfers legal ownership of the property with the condition that the lender may foreclose on your home if you fail to repay your mortgage.

Don’t be scared of your closing and your title insurance. It’s put in place to protect YOU, the buyer, from any real-life title problems that may occur on your property. And you don’t want that.

Enjoy your home, and congratulations on your closing!

For more real estate guides, stop by Pacific Alliance Title’s Blog.