HOW TO CLOSE ON TIME AND AVOID PROBLEMS

In addition to the stress involved in the actual house hunting process, there is also the stress associated with closing the contract. To help reduce the level of frustration, we've provided some tips and information.

To begin with, once a contract has been signed to buy a house, the settlement process, also known as the closing, begins. This settlement, or closing escrow, is when the title of ownership is transferred from the seller to the buyer.

However, before you can go into the settlement process a few things need to take place.

Secure Financing
In order to buy a house, you must first secure financing, which means taking out a mortgage loan. The lender will require specific financial information such as a credit report, proof of income, current expenses, current appraisal, property survey, and in some cases, an inspection to check for termites, radon gas, etc. Because of competition among lenders, approval should not take more than a few days.

Homeowners Insurance
You will be required to purchase hazard insurance or what's called homeowners insurance, which protects the lender should anything happen to the house such as fire, flooding, (which requires a special policy) or some other type of disaster as covered by the policy.

Choosing a Settlement Agent
As soon as possible, you will need to find an experienced and reputable settlement agent. Then, give the name to your real estate agent. Most agents will provide you with names of settlement agents that they have worked with in the past and will set this up for you. Make sure you obtain all settlement costs and associated fees. If you feel more comfortable having an attorney involved with the settlement phase, you should do so one to two months in advance, since they will also need time to look at the property and review all documentation.

The settlement agent will require information from both buyer and seller, including a copy of the contract, names, and contact information of any other parties involved in the sale or purchase of the house. In addition, you will need to provide the settlement agent with a paid receipt showing you have secured a minimum one year hazard or homeowner policy.

It is your responsibility as the buyer to stay in contact with the settlement agent and make sure they order specific things such as a property survey, title insurance, title examination or search (to ensure there are noother liens on the property), and a payoff notice of the seller's mortgage. You should also consider purchasing homeowner's title insurance. In addition, it's important to confirm that the seller has conducted any required inspections (termite, structure, etc.).

Property Condition
Set some basic minimum standards as to what condition you expect the property to be in for the day of your move. For instance, the seller or neighbors could start using the back yard as a trash dump. You may also want to include some statements in your offer like the roof doesn't leak, there are no broken or cracked windows, sump pumps are in working order, there are no plumbing leaks, and the yard has been kept up.

Closing Costs
Within a couple of days before the settlement you should receive an estimate summarizing all settlement costs including pro-rated homeowner dues, utilities, etc. To help the process move along smoothly and efficiently, request copies of the basic settlement forms a few days before the actual settlement since there is usually a lot of information to read through. This provides you with an opportunity to thoroughly read everything and come prepared with questions.

Walk-through
Prior to the settlement being finalized, you will need to do a walk-through inspection of the property with a licensed inspector ensuring there are no major problems. If problems are found, you will need to notify the settlement agent immediately.

Settlement Day
In addition to a loan commitment letter, you will also be required to bring with you to the settlement a certified or cashier's check for the down payment plus any other costs due as outlined to you relating to the settlement. These extra costs might include escrow for property taxes and insurance, recording fees, first payment due, etc. It's probably also a good idea to bring your personal checkbook or extra cash with you just in case there are any other fees that you weren't aware of.

The settlement agent is responsible for explaining everything to you in detail. They should also double check all figures to ensure there are no errors.

If everything checks out, you will do a final review of the documents, sign the documents, and pay the money. Once that's done, the settlement is complete and the keys to the property are handed over to you. Finally, you will receive a copy of the recorded deed and title insurance policy.

If for any reason, you are unable to attend the settlement in person, be sure to notify the settlement agent in advance, so a Power of Attorney can be prepared.

Now the only thing left to do is move and enjoy your new home!