Strategic Points Group: Buying Homes: Closing your loan

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The closing process
Go to any courthouse and you can find property records detailing real estate ownership in your community -- sometimes records that date back more than a hundred years.

These records provide important proof that there is a good, marketable and insurable title to the property. Equally important, such records enable buyers to provide proof of their ownership when they sell.

The closing process, which in different parts of the country is also known as "settlement" or "escrow," is quickly becoming computerized and automated. In many cases, buyers and sellers don't need to attend the closing; signed paperwork can be sent to the closing agent with overnight delivery.

Closings bring together a variety of parties who are part of the "transaction" process. For example, while the history of property ownership has been checked, it's possible that the records contain errors, unrecorded claims or flaws in the review itself, thus title insurance is necessary. At closing, transfer taxes must be paid and other claims must also be settled (including closing costs, legal fees and adjustments). In most transactions, the closing agent also completes the paperwork needed to record the lien.

What to expect
Settlement is a process where all of the necessary paperwork needed to complete the transaction is signed. Closing is typically done at a title company, sometimes with both buyer and seller at the same table, sometimes with each party completing their papers separately.

Whatever the case, the result is that title to the property is transferred from seller to buyer. The buyer receives the keys and the seller receives payment for the property. From the amount credited to the seller, the closing agent subtracts money to pay off the existing mortgage(s) and other transaction costs. Deeds, mortgage papers, and other documents are prepared, signed and filed with local property record offices.

What you need to do
One of the best parts of "closing" is that buyers and sellers need to do very little.

Before the closing, buyers typically have a final opportunity to investigate the property to assure that its condition has not materially changed since the sale agreement was signed. At closing itself, papers have been prepared by closing agents, title companies, lenders and attorneys. This paperwork reflects the sale agreement and allows any parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records as a lien and the government collects the transfer taxes.


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