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Requirements before Real Estate Closing



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By : Sonia Smith    99 or more times read
In closing preparations, there are several requirements that should be accomplished to avoid delays and provide a smooth closing. Following are the most common documentations and information required.

  1. Information on Liens or Existing Home Mortgage. Consequently, all home liens and mortgages including home equity should already be paid off or subsidized. You should provide a realty title with complete name of the lender, contact information and the loan number immediately. Some lenders will require a written request before releasing payoff information.

  2. The deposit or otherwise known as earnest money proves the sincerity of the buyer to purchase the property. Earnest money is generally one percent of the purchase price. Either the lawyer of the seller or the real estate agent will hold this fund until the closing of the deal. If you choose not to close the deal after the seller accepts your offer, you most likely will lose this amount and you could be sued for damages. If the seller does not accept your offer, the deposit will be returned. When the sale pushes through, the amount will be considered as a part of your deposit.

  3. A home inspection performed by a certified or licensed inspector is a survey of the mechanical and structural conditions of the home. Its main purpose is to uncover possible defects or repairs needed that might create a problem to the homebuyer.

  4. The closing cost is the amount, which includes loan origination fee, appraisal fee, and cost of credit report, lender’s inspection fee, title insurance cost, mortgage broker fee, taxes and documentation fee. Your mortgage lender is required to provide you details of the fees related to your loan.

  5. A contract is a written agreement by both the buyer and the seller. A binding and legal document allows the buyer to purchase the home as soon as all contingencies are met. It outlines details of the transaction including the description of the property, the selling price, date of closing and other details.

  6. Many contracts require a one-year warranty to be furnished to the buyer at closing. The seller normally pays for the home warranty and covers the systems and appliances of the property subject to the terms and conditions of the agreement.

  7. Some paper works are needed before closing on a home. These include a title search to make sure that title is clean and free of liens, a title insurance as protection for the buyer and the lender against oversight regarding a claim.

  8. If any of the parties is required to bring an amount during closing, these funds should be made in the form of a cashier’s check for an amount less than $10,000 and a wire transfer for $10,000 or more and must be transferred to the title company’s escrow account.

  9. The closing statement or the settlement sheet is a document required by the DHUD or the Department of Housing and Urban Development to account for all the financial aspects of the purchase of the property. It provides a detailed list of the escrow amount, the name of the escrow agent and the fund paid at closing. The Real Estate Settlement Procedures Act requires a copy of this document to be distributed to the seller and the buyer prior to closing.

  10. A practical arrangement should be established prior to closing the deal and taking over the property. There should be certain arrangements of the utility service and details of the first mortgage payment.
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