Here is the final part in the Buying a HUD home series written by Richard Weisser. This series has been a wonderful guide to break down the HUD homebuying process.
The closing of a HUD home is pretty similar to the closing of any home. One important thing to note is that you MUST HAVE THE LOCKS CHANGED. All HUD homes are keyed the same and you will not be given any keys at closing.
In Part Six of this series Taking the HUD contract through to closing. we learned about what happens between the time a HUD contract is executed and the time of settlement.
In this chapter, we will discuss the closing or settlement process.
Once the title work has been completed and the buyer's loan is approved, it's time to close on the property. All HUD properties are assigned to a law firm or title agent that is responsible for closing the government owned property.
Buyers need to be aware that the attorney or agent is representing HUD and not the purchaser. If a purchaser desires legal representation, they should engage an attorney to represent them at settlement.
At closing, buyers will acknowledge that the HUD-1 settlement statement is correct. This statement outlines all of the costs involved with the purchase of the property, and indicates which items are paid by the buyer and which are paid by the seller.
The statement also itemizes credits and debits from one party to another, such as a credit for prorated property taxes or bonuses from HUD.
The final reconciliation involves either an amount of "cash from" the buyer or in some cases in which deposits are greater than the down payment "cash to" the buyer.
In the event that a mortgage is obtained, the remainder of the closing involves signing the myriad of documents contained in the "package" from the lender. These documents are not exclusive to a HUD purchase, but are required from the lender on every kind of real estate purchase.
Some examples of documents that a buyer will sign in the state of Georgia are the promissory note, a security deed, tax documents and a waiver of judicial foreclosure. The typical package will require between 50 and 100 signatures or initials!
Please be aware that when a HUD home is purchased, no keys will be passed across the table. It is the responsibility of the purchaser to immediately have the locks changed at their expense after closing. Typically, your real estate agent will open the door in order to facilitate the changing of the hardware.
The closing agent will then ensure that the buyer is provided with a copy of every document, including the warranty deed which the attorney or closing agent will record at the county courthouse before mailing an original to the buyer.
At that time, congratulations are in order. You will have successfully purchased a HUD home, and now it is time to bathe in the "quiet enjoyment" of your very own home!
This installment concludes the series. Previous: How to bid on a HUD home.
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