The Closing

 

In Colorado, the closing completes the home purchase process. The buyer pays the seller the money for the property, and pays other charges including loan fees  and title company closing costs. The seller signs the deed transferring ownership to the buyer, pays his own closing costs, and hands over the keys to the buyer. You own the property and the seller pockets the money. It’s basically just that simple.

Overall Process

Many buyers have heard nightmare stories of closings, stories of nasty arguments, delayed closings, or even closings that fell apart. Occasionally, difficulties do emerge at closing. We may discover that the seller did not complete inspection repairs they had agreed to address, that there is an easement on the property that the buyer had not known about, or that not all the lender’s requirements have been satisfied by the buyer. There are a myriad of details that need to get pulled together in the closing documents and at the closing table, so problems can emerge even when everyone is doing a good job.

Generally, however, if a good faith effort has been made by competent agents, loan officers, and title officers to pull everything together, the closing should tend to be a pleasantly boring event. The seller signs the deed, several financial statements and a couple of  disclosures. The buyer signs a similar number of real estate documents, and then signs a three inch stack of documents and disclosures from the lender. Forty-five minutes later, the title company’s closer leaves to make copies of the closing documents while the buyer and seller exchange keys and pleasantries. It’s done.  It is a simple procedure. It sometimes feels like a bit of a  letdown after the intensity of other phases of the purchase process. But as  anyone who has been through a difficult closing will tell you, this is one event where “boring” is what we’re working towards.

What Happens and Where?

In Colorado, the closing is typically held at the offices of the title insurance company. For a week or so prior to closing, the title company will have worked with the lender and the agents  involved, and sometimes directly with the buyer and seller, to make sure that the documents are properly prepared and that all the proper charges and credits on the buyer’s and seller’s financial statements are correct. At closing, the title company’s “closer” will conduct the closing ceremony,  explaining documents to the buyer and seller and making sure that everything is properly signed. The agents or attorneys involved will also review critical documents and provide any additional explanation required by the buyer and seller.

One of the closer’s goals will be to move the closing ceremony along expeditiously, since during busy times the title company may have closings scheduled ever hour on the hour. You will typically notice some tension between the closer’s responsibility to explain documents and their desire to move the process along. Stay focused on the task, but don’t forget that this is a big deal. If you have questions or concerns, raise  them. Mistakes are sometimes made in the closing and loan documents. Again, you will probably have little latitude to change anything in the closing documents, but you should understand what you are signing. As indicated in the previous section, reviewing important documents prior to closing can be a big help.

What You Need to Bring

You should check with your loan officer and your agent several days  prior to closing to make sure that you have everything you need at closing. In  some cases, there may be a letter or receipt that you need to bring. Generally,  however, you will only need to bring three things to the closing:

Real Money. In Colorado, you need to bring “good funds” to closing. That means you either need cash (not recommended), money that was wired to the title company, or a certified bank or cashiers check. If you bring a personal check, or if the wired funds have not arrived, you won’t close. As noted in the previous section, you should have received a precise statement of how much you need to bring to closing a day or two before the closing occurs. If not, you need to get the best estimate you can get from your lender or from the title company. Then wire funds or bring a cashier’s check for at least a few hundred more. The title company can write you a check for the difference at closing. In fact, it is rarely a bad idea to have the check made out for $200-$300 more than you think you’ll need, in case someone discovers a charge that was missed. It is also a good idea to bring a checkbook with you. If you are bringing a cashier’s check to closing, it is best to have it made out to you rather than to the title company. You can then sign it over to the title company at closing.

Photo ID: The title company will require some type of photo ID to verify that you are who you say you are. Most people use their driver’s license. Again, if you don’t have an acceptable photo ID, you won’t close.

Homeowner’s Insurance. If you haven’t already provided the title company with proof that you have the property insured, they will require that you bring documentation from your insurance company to the closing.

From the Seller at Closing

You should also try to get several pieces of information from the seller:

Utilities Transfer. Verify that the seller has called utility companies to terminate their service. If they haven’t, you may have troubles getting things transferred into your name.

Contact Information. Try to get the seller’s new phone number and ask if you can call with questions. This can be a lifesaver if you discover a quirk in the way something works once you’ve moved in.

Basic Home Information. If you don’t know where the mailbox is, what the combination is to the key pad on the garage door, or where to put your trash out, now is the time to ask.

Who are the Neighbors? If you haven’t already, you might initiate a discussion about the neighbors. It can be useful to know if there is a neighborhood expert on gardening or a teenager who loves to baby sit.

Perspective

Above all, keep your cool, your focus, and your positive attitude at the closing table. While the closing is typically a rather boring process, minor glitches can arise that look like disasters to both the buyer and seller at this juncture. Generally, they are glitches that the professionals involved have dealt with dozens of times  before. If everyone keeps a cool head, most problems can be dealt with easily and expeditiously. When things go wrong, the closing may take an hour or two   longer than normal while you wait for a key document to be corrected or for verification that the furnace servicing was completed. Stay cool. When you watching your kids on the swing in the backyard five years later, you probably won’t be thinking about the glitch at the closing table.