What Really Takes Place at the Closing

by Kathleen M. McCarthy

After you've found your dream home, successfully negotiated an offer, signed the purchase and sales agreement and secured financing, the buyer is ready for the most exciting day - the closing. The homeowners insurance agent will prepare a binder for coverage on the new home, and the attorneys will determine how much money the buyer will have to bring to closing in the form of a cashier's or certified check. The closing is usually held at the Registry of Deeds for the county in which the property is located, at the bank attorney's office or the lender's office.

On the day of closing, the buyer arrives at the designated location with their check, the insurance binder and a checklist of items to be discussed with the seller based on the final walk through. The closing is usually attended by both buyers and sellers and their respective attorneys, the real estate broker and a representative of the bank.

There are a number of documents that must be signed; the most important being the promissory note. This is the buyer's promise to repay the bank the money which has been borrowed to purchase the home. This document should be carefully reviewed by both buyer and attorney as it represents the contract or agreement between the buyer and the lender. The next most important document is the mortgage with 'secures' or guarantees to the bank that the buyer will repay the funds borrowed. After the appropriate documents are signed, the mortgage is then recorded at the Registry of Deeds to assure the lender that the buyer will not sell or refinance the property without repaying them first.

Among the other documents the buyer signs at closing are the RESPA or HUD Settlement Statement which itemizes the closing costs. It is a good idea to bring your "Good Faith Estimate" given at time of application to compare with the actual closing costs charged. Additional documents signed at closing include the UFFI certificate, (Urea Formaldehyde Foam Insulation,) which discloses to the lender whether or not there is any Urea Formaldehyde present on the property. Next is the Truth in Lending Disclosure which projects the full amount to be repaid to the lender over the life of the mortgage. If the loan is adjustable, this form will contain estimated changes as well as adjustment in escrow amounts. Also included in the standard documentation is a lead paint law disclosure, escrow account statements, (describing the monthly and yearly amount of escrows for taxes, homeowner's insurance and private mortgage insurance) to be collected by the lender.

Once all of the closing documents are signed and the buyer has given the bank attorney their cashier's or certified check and insurance binder, the deed and mortgage will be recorded at the Registry of Deeds. The buyer is now the official new owner of the property.

Kathleen M. McCarthy is an attorney in Massachusetts.

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