Closing the deal

Your real estate agent can help you prepare for the final meeting to close the deal on the purchase of your home and will usually accompany you to the closing meeting. There you will receive and sign several documents, and you will give the seller the money required for the down payment and other costs associated with the sale. At the time it feels like a mountain of paper work that can make you nervous unless you know ahead of time what you will be signing. Here’s likely what it will be:

The settlement statement will give the names of buyer and seller and all parties who will have to be paid to complete the transactions (such as the broker who receives a commission, the title company, etc.) , as well as an accounting of all the money exchanged and a showing of “who paid what.” You have a legal right to review this statement the day before closing if you wish to do so.

The loan disclosure statement will give specific information about the loan, such as the annual percentage rate, the total amount of interest to be paid over the course of the loan, the monthly payment for principle and interest, the number of payments, and the date the loan will be paid off.

The mortgage note is the contract between the borrower and the lender. It also legally specifies that the lender has paid the money to the seller and that the borrower is obligated to repay the lender.

The deed of trust allows the lender to sell the home if the borrower defaults on paying the loan. A trustee is identified who has authority to sell the home if foreclosure is necessary.

The deed formally transfers ownership of the home to the buyer from the seller. The most desirable type is a general warranty deed, in which the seller guarantees that there are no other interests to the home. A special warranty deed, on the other hand, specifies only that no such other interests were established while the seller owned the property and the seller makes no guarantee about any interests under previous ownership. A quit claim deed guarantees nothing in the way of title (including, oddly enough, even whether the seller actually owns the property!). Lenders, of course, usually require a general warranty deed.

A title policy is insurance that backs up the warranty deed, because the policy writer guarantees that if an outside claim of interest to the property emerges, the policy writer will reimburse the buyer and seller for any damages. The insurers usually have checked public records to be able to make such guarantees. Lenders nearly always require such title insurance.

Other documents may include surveys, appraisals, inspections, home owner’s association by-laws specifying your rights and obligations, etc.

All these documents will be signed by all pertinent parties, money exchanged, and then you become the owner of your new home. Congratulations!

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Prudential CT Realty | 856 Washington Street | Middletown, CT 06424