Wow – you probably never thought this day would come. But it is finally here – the day you close on your home and get the keys!!! You did everything you were supposed to – got a good Buyer Agent to help you with your search and to be there for you! You got a good lender who was able to get you a great mortgage! You found the perfect house – and wrote an offer that was accepted! You made loan application and you now have loan commitment! You did inspections and were able to satisfactorily negotiate this with the sellers! So now, today, you are excited to be sitting down at the closing table with your Buyer Agent and your settlement agent!
But for many first time home buyers, closing can also be a nerve-racking time because you just don’t know what to expect! Hopefully, you have been able to talk to your Buyer Agent about it, but just in case, here is what has happened before you got to the closing table AND what will happen once you are sitting at the closing table!
The settlement agent you chose to do your side of the closing would have sent someone to the courthouse to do a search of the title to the home that you are purchasing to make sure that the title is a clean and marketable title. The lender will require you to have, at a minimum, the basic title policy on the property but I have always recommended to my buyers to get an enhanced title policy! There are differences between the two – here is a good site to know just what those differences are!
Order The Survey
Many buyers are choosing not to order a survey – and if you are buying a condo or townhome, the chances are you really won’t need to get that done! But if you do choose to get a survey done on the property you are purchasing, then the settlement agent will order that for you. Why would someone order a survey? It allows you to see the property lines and a survey will discover if there are any encroachments, etc. If you are buying a property in a rural area or with some acreage, it may also let you know just how large the lot actually is!
Comply With The Lender’s Instructions
Once you have gotten loan commitment from the lender, they will prepare a closing package that will be sent to your settlement agent. In that packager there will be a long list of things that they will require before they will wire the funds to the closing agent. This list may include things like the title insurance binder, a copy of your homeowners insurance, perhaps a copy of the survey and much more!
Prepare The Closing Disclosure
This is the document that will summarize the financial terms of your loan and the transaction. This will tell you how much money you will need to bring to closing (most settlement agents now like to have the funds wired into their trust account before closing). The preliminary Closing Disclosure (CD) will be circulated around to all parties involved (your Buyer Agent, the seller’s agent, the seller’s settlement agent and the lender) to have it reviewed so that any corrections can be made. Once your settlement agent has received an approval from all these parties, they will send you a copy of it so that you will know just how much money will need to be brought to closing.
The Closing Disclosure you will see at the closing table will include not only the buyer’s figures and costs, but will also include the sellers costs:
- The payoff of the seller’s mortgage or mortgages – this they will get directly from the seller’s mortgage holders
- The HOA dues – they will want to verify if the HOA dues are paid to date, if there is any capital contribution or special assessments as well as what the monthly fee is
- Any credits and adjustments are needed, per the contract
- Verify that the termite report, well and septic inspections have been completed and will have these paid for from the sellers proceeds at closing as well as making sure that there are no issues with these reports
- Verify if any repairs that were completed as part of the buyers inspections have been completed and have been paid for or are to be paid from the sellers proceeds at closing
- Verify if a home warranty is being provided and who is to pay the cost of that home warranty
Conduct The Closing
You will schedule the day and time for your closing with your settlement agent. When you come to closing, the attorney will want to take a copy of your driver’s license as they will be notarizing a number of the documents you will be signing. The settlement agent will then summarize each and every document you will be signing, pointing out the important parts and answering any questions you may have on the documents. Normally, closing will take about 30 minutes or so, but you will want to make sure you leave enough time for any questions to be answered. The settlement agent will also make sure that the dollar figure you have to bring to closing is very close to what you were given at the time you made loan application with the lender. Once all the documents are signed, you will be provided with the keys to your new home! Your settlement agent will also provide you with a copy of all the documents you signed – most in this area tend to scan these documents and put them on a thumb drive for you to keep! If keys are not to be provided at the time of settlement, this should be agreed to by all parties at the time your contract was signed.
Update Title, Record & Disburse
Once you have signed the closing documents, and the settlement agent has received the seller’s documents and the funds from you (the buyer) as well as the lender, the next step is for your settlement agent to do a final title search to ensure that there are no additional liens that were put on the title between the time they did the initial title search and the day they will be recording the title! Once that final title check is done, your settlement agent will go ahead and record your deed and the lender’s deed of trust at the courthouse! This ensures that your lender has a lien on the property and you are shown as the new owner. Once the deed and deed of trust have been recorded at the courthouse, your settlement agent will then disburse funds. They will pay off the seller’s mortgage (so that lien is now removed from the title), they pay any contractors who did work at the house per the inspection addendum (so that they cannot file any mechanics liens on the property after closing), they will pay the Realtors the commission due and they will pay off any other expenses that need to be paid off.
Finally, They Will Send To You The Deed and Title Policy
These documents will be sent to you when they are received. The recorded deed will be sent to your settlement agent by the courthouse and the settlement agent will forward to you. The title policy will be sent from the underwriter and again will be forwarded to you. If you purchased a home warranty, this will be sent directly to you by the home warranty company. All of these things should be kept in a safe place. All lender documents will also be sent back to the lender once everything has been completed!
Question – Do I Need To Have An Attorney Do My Closing?
This is a question I get asked over and over again. In Virginia, you have a right to have a non-attorney do your settlement. But if you do choose to have a non-attorney do your settlement, please keep in mind the things they CANNOT do —
- They cannot draft any deeds or any other legal documents
- They cannot explain your rights & obligations pursuant to the contract & other legal documents
- They cannot explain to you the meaning of the loan documents you are signing at closing
- They cannot explain the impact of any title defects or title policy exceptions
- They cannot offer answers to or opinions on some questions that may arise during the closing
- They cannot provide any legal representation or give legal advice to any party
- They cannot explain the legal effect of a document in the chain of title
- Cannot provide legal opinions in response to questions like “What should I do?” “What are my legal rights & obligations?” “What are the lenders rights and obligations under this document?”
Buying a house can be stressful, and even though in Virginia you have the right to have a non-lawyer do your settlement closing, I normally recommend to my buyers that they use an attorney!
Have a question? Thinking of buying your first home? I have worked with many first time home buyers buy their dream home in the Richmond area! If you want to sit down and discuss moving from renting to purchasing, please feel free to contact me! No pressure, no obligation!
You can always reach me at 804-566-0781 and email me at Barbara.Reagan@LongandFoster.com