The closing of a mortgage home loan is all that stands between home buyers and taking possession of their property. What is a closing, and what happens during the real estate closing process? Investopedia describes closing as the final step in completing a real estate sale. Closing a mortgage home loan also involves paying out the proceeds used to buy a home, usually by a wire transfer. How a closing is conducted depends on state laws governing real estate transactions. In general, the whos, whats and whys of a home closing include:
Closing agent: Real estate closings may be conducted by state licensed title officers, escrow agents or real estate attorneys. State law governs who handles the closing. In general, real estate transfers are completed in accordance with one of two procedures. "Power of sale" law allows the transfer of real estate without court proceedings or filings. Judicial real estate law requires a legal transaction conducted by an attorney. The purpose of a closing agent is to provide a neutral third party to receive, pay out and account for money owed and paid in the transfer of real estate from seller to buyer.
Parties to a closing: The organizations and people involved in a closing include the buyer(s), seller(s) closing agent, real estate brokers and agents, third party vendors and the buyer's mortgage lender. Third party vendors are companies that provide services related to the sale of a property and may include appraisers, title insurance companies, home repair services and others as determined by sale terms, lender requirements and local laws.
Escrow or trust accounts used to hold funds connected with a real estate sale: The closing agent receives, holds and accounts for all funds received from parties involved in a home sale and closing. Parties may include buyers, sellers, third party vendors and mortgage lenders. All funds received and paid out by the closing agent are itemized on a form called a closing or settlement statement.
Two transactions, one closing: A closing process completes a real estate sale and funds a mortgage (most of the time -- the majority of buyers don't pay cash). Closing a mortgage home loan must occur before the property transfer can take place and be recorded. The closing agent is responsible for coordinating efforts between the mortgage lender, buyers and sellers to ensure that the buyer's down payment and mortgage proceeds are available for payment to the seller at closing. Mortgage documents are signed and recorded on the closing date, which creates a public record of a lender's collateral interest in a home.
What happens at closing: Real estate closings may take only a few minutes or can be more complex depending on the circumstances involved. In general, the sellers sign a deed that transfers ownership of the home to the buyers. The buyers sign mortgage documents that describe the terms of the home loan. The closing agent pays the sellers for the home sale, deducts the closing fee and costs, and also pays real estate agents and third party vendors as shown in the the settlement statement. Closing agents answer questions and resolve any concerns before closing a mortgage home loan is completed.
While a real estate closing may seem simple, things can go wrong. Closings can be delayed for a variety of reasons, including filing of legal proceedings such as bankruptcy or unexpected events such as natural disasters, illness or other unplanned situations. MSN Real Estate advises home buyers and sellers to check with their mortgage loan officers and closing agents to help prevent last minute surprises.