By:
CJ Harrington
Keller Williams Realty
www.cjharrington.com
cjharrington.crs@gmail.com
440.336.0612
06-13-08
So, what does the closing involve?
The first part is the offer. Here, there is no guarantee that your offer will be accepted by the seller, but once you find your perfect house, it's wise to move fast. I find that a good rule of thumb is to make an offer that's 10 percent below the asking price. This should give you some room to negotiate, but will not be offensive so the seller is likely to counter.
The second part is the deposit or earnest money, this is a demonstration of good faith and commitment by the buyer to the seller. This will allow the seller to recognize you as a serious buyer. The deposit is usually 1 percent of the home's purchase price and is included in an offer to purchase. Usually, the real estate brokerage holds the deposit in trust until the deal closes. If you decide not to close on a deal once your offer has been accepted, you may lose your deposit and be sued for damages. If the seller does not accept your offer, your deposit will be returned. If the sale proceeds, your deposit is usually applied to your down payment.
Also involved are contingencies. These are certain requirements in a contract that need to be met before the buyer is required to close. Typical among them: the buyer's securing of financing and an acceptable house inspection. Generally speaking, an inspection contingency covers a 10-to-14-day period from the acceptance of the contract, and financing contingencies run for 30 days. Yet, be aware, in a seller's market, buyers may be asked to fulfill their contingency requirements in shorter time frames.
Okay, so what does a home inspection involve. In a home inspection, a professional conducts a thorough examination of a property to assess its structural and mechanical condition. The idea here is to catch potential problems that a buyer might not detect.
Finally you will move forward with closing and recieve a "closing statement". This is a document that the Department of Housing and Urban Development requires to account for all financial aspects surrounding the sale and purchase of a home. It provides a list of the funds that were paid at closing. Items include real estate commissions and initial escrow amounts (money or securities deposited). The Real Estate Settlement Procedures Act requires that a copy of the settlement sheet be distributed to both parties at least one day prior to settlement.
Still, before you can close on a house, some paperwork must be completed. This includes a title search (makes sure the title is clear), title insurance (protects the buyer and the lender from an oversight regarding a claim) and an application for homeowner's insurance (necessary for securing a mortgage).
Alright, so here is the question you realy want to know... What are the closing costs? Well, these costs varies, but may include: a loan origination fee, an appraisal fee, the cost of a credit report, a lender's inspection fee, the cost of title insurance, a mortgage broker fee, taxes and a fee for document preparation. Remember, your lender is required to give you prior notice of fees associated with your loan.
So, now the deal is nearing closing, but before the deal is closed and you take possession, you must make some arrangements regarding utility service and first mortgage payment.
An finally, we come to settlement which describes the payment of the balance of the purchase price the buyer owes on the property, and the transfer of the title. Once the title is in your hands, you can now look back and remember the journey, and enjoy your new home.
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