You’ve bought your first home. The closing date is set and as you pack up your belongings and prepare to move, you realize that maybe you aren’t quite sure who all of the moving parts that brought your deal together are and exactly how they contributed to your purchase. If you’re concerned that you might show up at the closing table less informed than you’d prefer—never fear.
Knowledge is power, so here’s a veritable “Who’s Who” at your closing table.
This part you know. You (the buyer) and the homeowners you are purchasing the house from (the sellers) will both be present when closing on the property.
Both the buyers’ and sellers’ attorneys are there to make sure their clients’ rights and interests are legally represented.
After an offer is accepted, the sellers’ attorney drafts the contract of sale using a standard template and makes any specific changes required. Once completed, he or she sends it to the buyers’ attorney who reviews it. If everything is accurate, the buyers’ attorney will have the buyers sign the contract of sale and return it to the sellers’ attorney with a “good faith” deposit.
The sellers’ attorney reviews the contract again for any changes the buyers’ attorney made and then has the sellers sign the document as well, which signifies the official start of the deal. Next, the buyers’ attorney orders a title search of the property to identify any liens or encumbrances that need to be cleared before his or her buyer can take ownership and advises them on proceeding with their mortgage application.
The title company checks the public records for the chain of ownership to make sure that the property being sold has always been properly transferred and any previous debts tied to the property has been satisfied in a proper and legal manner. It then provides an insurance policy that covers the buyers against any past or future claims that might attach to the property.
Remember, there are three components of the mortgage: The home mortgage itself, the deed, and the note.
Contrary to popular belief, a buyer doesn’t get a mortgage; he or she actually gives the mortgage to the bank, which is a security interest in the property the bank is lending on. The buyers are pledging the property as security for the loan that the mortgage lender is giving them. In essence, the house is the collateral for the loan.
The deed signifies the ownership of the property—think of the Wild West, when land was deeded to the settlers.
The note is the legal promise to repay the loan to the lender, who can foreclose and take back the property if the buyer doesn’t meet their payment obligations.
The closing is the culmination of the work that comes before the closing; the home search, price negotiations and acceptance, contracts, compliance work, mortgage documentation and legal preparation all lead up to the final day everyone had been working towards. The bank attorney runs the show at the closing to ensure all required documentation is properly executed and that the transfer of ownership from the seller to the buyer meets State, Federal and lending guidelines.
One of the benefits of hiring a realtor when looking to buy a home is that he or she will attend the closing to make sure that the buyers and the sellers are happy with the results, and also, to collect the commission for a couple months of hard work!