Most of the responsibility for a successful closing is with the home buyer

Most of the responsibility for a successful closing is with the home buyer. A closing is when title is transferred from home seller to buyer. The buyer makes full payment for the property. Closing means the transaction is concluded, all documents are signed, delivered and funds are disbursed. To ensure the process goes smoothly here are ten tips.

Tip #1-- Know the Process

Locate a loan, also called a mortgage. Visit www.hsh.com for mortgage rate data. Also www.bankrate.com offers helpful mortgage information. Then apply for a loan with a lender you have chosen, get a letter of pre-approval for a specific loan amount for a specific time period, and a good faith estimate from the lender.

Find a property and make an offer (be sure to include a time frame for the offer to be accepted or rejected). This may be followed by a counter-offer by the seller.

Once the offer is accepted, the seller provides a full disclosure statement that is included as a part of the contract between buyer and seller. The purchase contract is the binding legal document. Be sure the conditions of purchase are subject to availability of financing to avoid loss of your deposit. The purchase contract serves as a checklist to protect both buyer and seller.

An appraisal is completed and the loan is processed by your lender.

The closing, which includes all documentation to be signed and transferred, is the last step. For more information visit www.escrowhelp.com

Tip #2-- Know the Players

The direct parties involved are the buyer and seller, real estate agents, loan officers or mortgage brokers, the title company, the home insurance agent, an appraiser, home inspector and sometimes a real estate lawyer.

Tip #3-- Find a Good Lender

The best way to find a good lender is from personal recommendations from friends or colleagues. Be sure to ask why they recommend a particular individual. You need a lender who will act responsibly and reasonably quickly.

There are many types of lenders. Mortgage bankers use their own money for the mortgage. Retail banks are where most people have a checking and/or savings account. Credit unions, similar to retail banks, require membership in order to receive benefits. Mortgage brokers arrange for a loan by shopping around to find the best deal for the homebuyer.

Tip #4-- Find a Good Real Estate Agent

Personal recommendations are also often the best approach. Sellers pay commission to real estate agents; their job is to get the best price for their customer, the seller. When you call a real estate agent, expect a return call within minutes or hours, this is the first sign of a good real estate agent.

An experienced real estate agent can address all issues and make closing a success. The National Association of Realtors® web site www.realtor.com is a good resource.

Tip #5-- Budget for Closing Costs

There are loan origination and escrow fees, insurance (both homeowners and title), taxes, attorney fees (expect an hourly rate if an attorney is involved, usually several hundred dollars), property inspections, private mortgage insurance (if you make a down payment of less than 20%), prepaid loan interest, courier, notary, and recording fees.

Beware of junk fees, such as underwriters fees and loan warehouse fees.

Tip #6-- Good Communication is Essential

Communicating with all parties involved helps avoid misunderstandings. Total communication with the closing agent at the title company can help you avoid many problems. Never place the closing agent in the middle of a dispute, they are not a negotiator, but are important to a successful closing.

Tip #7-- Know Who Is Paying for What and When

The real estate agent is responsible for keeping you informed of who pays for what and when. Ask about who pays for the appraisal, survey, the home inspection or any home improvements and when are they paid. Make sure your purchase offer clearly designates whether the seller or buyer pays for each item.

Tip #8-- Know the Critical Documents

A letter of pre-approval from a lender or proof of an escrow account for a cash purchase are critical documents. A good faith estimate helps a borrower check for any hidden fees in closing paperwork.

The purchase contract is the legal document used until closing. A seller’s full disclosure can legally protect the seller from any issues surrounding the soundness of the home. HUD-1 disclosure summarizes all expenses and fees the buyer is expected to pay.

The mortgage or deed of trust secures the loan made by the lender.

Tip #9-- Read the Fine Print

Read the closing paperwork at least 24 hours before closing. As the buyer, this is your final opportunity to check for the proper calculation of closing costs. Make sure you fully understand the loan documents.

Tip #10-- Have a Final Walkthrough or Home Inspection

Before closing, have a walkthrough or home inspection completed. Address all issues while the seller still has an incentive to fix any problems.

Additional Resources:

- For advice on buying and selling with home listings: www.realty.com

- The Federal Citizen Information Center: www.pueblo.gsa.gov/housing.htm

- U.S. Department of Housing and Urban Development: www.hud.gov