Settlement -- also referred to as closing -- is the final stage of making your dream home your own. The final settlement meeting will usually involve the closing agent, the seller, both real estate agents and you. Before you sit down at the table to sign the final papers, make sure you have covered all of your bases so that the settlement goes as smoothly as possible.
Prior to closing:
- Your lender is required to give you a booklet explaining the closing costs, a "good faith estimate" of how much cash you'll have to supply at closing, and a list of documents you'll need at closing.
- Have your real estate agent or the lender conduct a title search. A title search involves looking through public records to see if anyone else has a claim to your property.
- Determine if you are required to purchase lenders' title insurance to protect your lender from claims. This insurance can guard against a faulty title search, as well as other issues that can pop up such as liens or development restrictions that even the most thorough search will not reveal.
- Purchase your own title insurance. The lender's and previous owner's title insurance will not protect you against a claim.
- Arrange for a home inspection. A home inspection will let you know the condition of your cooling and heating systems, pipes, structure, grade of the land and electrical system. It is strongly suggested that the buyer hire the home inspector. You also should schedule a personal inspection of the home at least 24 hours before settlement to ensure that there has been no recent damage and that the seller has fixed prior agreed-upon issues with the home, if any existed.
Once you get to the settlement table, you will find yourself signing a lot of forms. Most of these forms will be supplied by the signing agent; however, you will be responsible for bringing a copy of your home owner's insurance policy with proof of payment and a certified check for closing costs and any remaining portion of your down payment. Check with your agent to see if any other forms are required by the state or local government.
A day or two before the settlement appointment, you will receive a HUD-1 Settlement Statement from the closing agent. This will show you all of the fees associated with the purchase of your new home -- which will include the application fee, appraisal fee, closing cost fee, taxes, etc. --and tell you how much money you will have to pay at closing.
Before leaving the table, make sure you are clear on when your first mortgage payment is due and where it should be sent. A few weeks following settlement you will receive a payment coupon book to send in future payments, or you may be able to arrange to have your payments automatically withdrawn from your bank account each month.
This is just a brief look at what you can expect during your settlement meeting. Your real estate agent will be able to answer specific questions and concerns that arise during this process.
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The Department of Housing and Urban Development (HUD) Real Estate Settlement Procedures Act (RESPA) helps consumers become better informed home buyers. You can learn more about RESPA at www.hud.gov/respa .
Contact the Lake Region Builders Association or visit the National Association of Home Builders at www.nahb.org for more information on buying a home.
