The Closing Process
What exactly is the closing process? What is involved? What goes on behind the scenes and how long does it take? Thanks to my personal closing attorney, Chad Pearman, P.C., we are breaking down the process and unlocking the mystery of the real estate closing. As with all of my process blogs (The Home Buying Process and The Home Selling Process), if you are not in the Nashville area, you will want to consult your local real estate professional and/or attorney to understand the practices in your area.
Whenever a property is bought, sold, or refinanced, there is a closing. Most times either a title company or a real estate attorney handles the process. The details vary for the title company depending on if you are buying or selling and the amount of time it takes on the day of closing to sign paperwork may too. The title company or attorney makes sure the contract is followed, that the correct party pays for the correct items, make sure the property is deeded in the correct name(s) in the correct way, and that all the fees are accounted for on the Settlement Statement. This outlines the general steps from the title company and, of course, there can be variables depending on the property or parties involved.
- Receive sales contract from lender, Realtor, or Buyer.
- Begin title search (takes 3-4 days). The title search verifies current ownership and reveals any current liens on the property such as mortgage, HELOC’s, property taxes, etc.
- If/when there is a “problem” getting liens released, the title company will communicate with the appropriate parties to get the liens cleared and/or released.
- Prepare title commitment for the title insurance approval based on various items. *Note: Next week I will explain title insurance and why you need it.
- Request written payoffs for all mortgages. *Note: The payoff amount is not necessarily the loan balance or payoff amount in your monthly statement or on the automated message.
- Insure taxes are prorated and split between Seller and Buyer.
- Request Home Owner’s Association information such as transfer fees, assessments and dues. Prorate dues and charge proper party with any fees.
- On closing day, insure all forms are signed by appropriate parties.
- Place all monies (down payment, loan amount from lender or full purchase price and trust money) into the title company trust account.
- Pay all parties from the trust account and make sure all liens are released (mortgage companies, HOA management company, pest inspector, contractors, real estate agents, taxes and other fees).
- After closing, record deed and mortgage documents then issue title insurance policy. *Tip: DO NOT pay a 3rd party to send you a copy of your deed. You should get a copy in the mail from the title company after it is filed. If you don’t, the court house has them and they will give you a copy for approximately $5.00. There are companies that will send letters after real estate closings and they will charge you around $50.00 for a copy. Though it’s not technically a scam, there is no need to do more with that letter than put it in the recycle bin.
Hopefully this has helped you understand the closing process a bit more. If it has raised more questions and you live in Middle Tennessee, call Chad Pearman, P.C. If you live outside of the Nashville area, contact a local professional and don’t be shy about asking questions. Real estate professionals do this every day, but you don’t and you have a right to understand. Happy Closing!
Photos courtesy of phasinphoto and Ambro via freedigitalphotos.net
Michelle Froedge is a residential Realtor and Principal Broker in the Greater Nashville and Williamson County areas of Tennessee. Wife to Robert, “Mom” to Tyler and Livvie, Auntie to Zelamie, she is a vegetarian and sings in her spare time. Michelle has lived in Nashville and Franklin since 1997 and has been selling homes since 2004.