OK Mr. Realtor in Katy TX when do I actually own the home I am buying?
Just in case some folks do not understand the purpose of some of my recent blog I will provide a brief explanation. There currently is an Active Rain Contest/Challenge where we are to write blogs about frequently asked questions from our clients. This blog below will be my third of a series of 10 blogs all with questions my clients ask on a frequent basis and my answers. I do plan to copy some of my blogs onto my web site and make these blogs separate pages. When clients ask the questions I will send the link to them and answer if I am speaking to them.
Home buying and selling is a process with many steps involved. The final step is closing and here in Texas we close at a Title Company. Normally, the seller will pay the new owners title policy and in return the seller will pick the corresponding Title Company. The applicable Title Company will hold the earnest money in escrow until the sale closes. The closing is held at the Title company’s office. I should also mention that the title policy I am talking about previously names the buyer as the beneficiary. There is also a title policy required by the buyer’s lender and normally the buyer will pay the cost of this policy. In total we have two title policies and I mention this as many of my clients get confused when they read the HUD 1 and find they are being charged for a title policy.
The closing process involves both buyer and seller to sign several documents. The buyers stack of documents is always much larger as the buyer’s lender provides a vast majority of the documents involved. As a buyer you will be required to bring a Cashier’s Check for the portion of the proceeds you will be paying at closing. The math is usually pretty simple being the total cost to the buyer less the amount the buyers are borrowing from the lender and this clearly shown on the HUD 1 as required by law. This is all fine and easy to understand. Once all the documents are signed the Title Company has to receive the funds from the lender and the term commonly used is funding.
OK Mr. Realtor in Katy TX when do I actually own the home I am buying? The buyer does NOT own the home until the loan has funded. The buyer cannot move in to the home until the loan funds unless the buyer has a prearranged lease agreement with the seller that begins immediately on the closing date.
I advise my clients that closing on any given Friday might be problematic especially when they are planning to move in over the weekend. No one can guarantee that any loan will be funded on any specific day. There are so many variables involved. I tell folks to close on Thursday and do not arrange for any moving of household goods until Saturday. If funding take beyond the next day the there is a serious issue and the home will probably not close at all.
I personally had a situation a few years ago where I had buyers moving from out of state and their closing was on a Friday early in the morning. One would think this was no problem but it turned to be a huge issue. The lenders office where funding occurs for this early August Friday was staffed by only one individual. The Title Company called me late in the afternoon to state that the one lady who was working was telling them she would not get to this wire and the loan would be funded on Monday. Huge problem as my out of town buyers had this large moving truck steaming towards Katy with an ETA of early Saturday morning. My clients did not yet own the home and could not move anything into this home until Monday after the funds were verified as being received. Who was going to pay for this mess? Lucky for me I caught the loan officer trying to sneak out early on a Friday afternoon with his golf clubs in hand. I had spoken to his assistant several times and she liked me and had delight in her voice when she told me he was trying to leave early. After a few minutes of me giving him a Come to Jesus lecture and me telling him that his bank was going to be liable for all direct and indirect costs incurred by my clients since their stuff would have to be stored over the weekend and then taken out of storage on Monday, by pure magic the loan was funded. Trust me when I say no one wants repeat this same situation. Of course I have not spoken to this loan officer since that Friday afternoon but as they say Qui est la vie de mon ami.