Whether buying your first home or your tenth home, this should be a time of celebration. Many skilled professionals are working hard behind the scenes to make sure you receive clear title and the close goes smoothly. At the same time, you are busing packing, scheduling movers, changing your phone and utilities service so everything will be ready for the move.
It all starts with a contract that has been accepted by both the seller(s) and the buyer(s). The contract will be reviewed by the settlement agent. The earnest money will be deposited into an escrow account where it will remain until the time of close.
One of the first things that happen is the request for title work. This will disclose how many loans are on the property (1st mortgage, 2nd mortgage, home equity line). The agent will order payoff figures from each lender. Other reports can include, surveys, septic letter, termite letter and inspection report. If you are financing your home, your lender will require you to have a homeowner insurance policy which might include flood insurance if the home is in a flood zone.
Once the preliminary work is completed and all information on the contract, loan closing documents and title commitment has been compiled, the settlement agent is ready to prepare the HUD settlement statement. All costs must be shown in the HUD. A HUD is divided into two sides--the seller's side and the buyer's side. This includes closing costs and pre-paid costs. Pre-paid costs include earnest money, insurance, loan application fees, appraisal fees and property taxes.
Once everything is finalized, the settlement agent will schedule a time and place to close. Sometimes both sides will use the same settlement agent but more often each side will close with a different settlement agent and a currier will transport the legal documents between agents. At that time the seller will transfer ownership to the buyer.
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