In any real estate deal, the most important moment is definitely the Closing Day where all the months of negotiations and planning culminates. All buyers and sellers anticipate this day the most.
In this guide, we will help you with all the closing documents you need for Closing Day.
Get A Free Mortgage QuoteWhat Is Closing Day?
Closing Days are when the seller and buyer meet at the table to seal the property deal. All parties need to be present to sign the documents, transfer the ownership of the property, and make the last financial settlement. The attorneys, lenders, real estate agents, sellers, and buyers are all present.
Here are all the documents you will need for the closing day process!
Closing Disclosure: Three Days Before
Lenders need to send the closing disclosure document three days before the closing day. It outlines the terms of the mortgage loan, payments, conditions, and the funds needed to close on the deal. Buyers should make sure that they properly read this document since any change can result in delays on the deal.
Proof of Homeowner’s Insurance: Two Days Before
Lenders require a proof that buyers have obtained insurance for the new property before the deal is closed. Make sure to contact the insurance agent a few days before the closing day is approaching so that they can get in touch with the lender.
Loan Application: Closing Day
The original loan application needs to be reviewed and signed.
Promissory Note: Closing Day
These notes are used to cover the responsibility and commitment a buyer is making for the mortgage loan. It needs to be read properly since this is an acknowledgement that buyers will be financially responsible for the mortgage loan.
Mortgage Contract or Deed of Trust: Closing Day
Depending on the state you are in, the mortgage contract or deed of trust puts the home as collateral against the mortgage loan in legal terms. Any defaults on the loan will result in the ownership being transferred to the bank.
Title Document: Closing Day
Title documents inform the buyer on who else has been in ownership of the home. You can do a title search to verify that the property is not in contention. It also includes title insurance for the buyer in cases where the title research didn’t uncover liens. In cases where problems are found after the closing is completed, the ownership of the property can be in contention. However, the title insurance will protect you and the insurance company helps file and fight for the claims on behalf of the buyer.
Deed: Closing Day
The deed results in the ownership transfer of the property from the seller to the buyer. The seller is the first one to sign it after which it is sent to the county recorder or the city when closing is completed.
Affidavits: Closing Day
There is a requirement often placed on the buyers from the title companies to sign a legal affidavit that confirms the legal name and identity of the buyer.
Transfer of Tax Declarations: Closing Day
This depends on which state you reside in. Sellers will have to sign paperwork that discloses the sales tax you might owe and the price of the property.
Certificate of Occupancy: Closing Day
For new buildings, an occupancy certificate is need to highlight that the property is compliant with local building laws and codes. It proves that it is good to go for occupancy.
Bill of Sale: Closing Day
Any property that the seller agrees to offer the buyer along with the home, such as furniture or appliances, are transferred through the Bill of Sale. Buyers should verify that any items agreed upon are properly listed on this document.
Riders: Closing Day
For non-owner-occupied homes or condos, riders are required in the closing documents. They add any additional terms to the property contract. For example, if the lender has included a penalty for paying the loan earlier, it has to be included in the rider.
Escrow Account Disclosure Statement: After Closing Day
The escrow disclosure comes after 45 days of the Closing Day and provides information from the lender on the escrow account. Through this account, the lender collects homeowner’s association fees, insurance, taxes, or mortgage insurance.
Get A Free Mortgage QuoteWhat Else Will You Need for Closing Day?
It’s not just the closing documents that you need for closing day. There are also other small items that you may need for it. Here are some of them:
- Valid Photo ID: Notaries require valid ID that has the name of the parties involved when they are authenticating the signatures on closing day. This means that if you have married recently but haven’t updated your ID with a name change, you will need to ensure that all legal documents reflect the current legal name instead of your married name.
- Cashier’s Check: This is dependent on the rules of the title company. Some companies require a separate cashier’s check for the costs to verify the amount. Some also allow you to send a wire transfer for down payment, but make sure to confirm this beforehand.
Getting Copies of Closing Documents
On closing day, parties receive a packet with all pertaining copies of the closing documents. Do make sure to ask your real estate agent about it if you don’t receive them or need extra ones. Brokers and agents are obligated to ensure there is a record of all transactions and can give buyers or sellers the documents they need.
Closing documents are also held by the escrow officer or closing agent. Some closing documents are also public record, such as the title deed. These can be accessed through the title company or the county recorder.
Usually, these documents are also recorded in a digital form, so you can also download and save them.
Common Closing Day Challenges
If you prepare the closing documents properly, it is usually a smooth process. However, some common issues might appear. Here are some of them:
- Delays: Delays might occur for any reason. There might be some discrepancies or financing issues that could delay the deal. Make sure to keep open communication with everyone involved to address the issue quickly.
- Unexpected Costs: To ensure that no surprising costs appear, make sure to review the Closing Disclosure. Parties shouldn’t hesitate to ask questions about anything they don’t understand.
- Document Errors: These can be corrected, so don’t worry about them. Any inaccuracies of paperwork should be bought to attention so that they can dealt with quickly.
- Title Issues: It is necessary to address title issues quickly. You might have to work with the title company or re-negotiate with the other party.
Conclusion
Closing day can be quite exciting since it is the culmination of months of effort and time spent for this deal. Closing documents are necessary to ensure that this process is smooth, so make sure to prepare beforehand for everything!
