Closing the Transaction

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What is a Real Estate “Closing?”

A “closing” is the meeting the Buyer, Seller, and their agents (optional), and representative from the lending institution and title company wherein the actual transfer of title to the property occurs.  The purchase agreement or contract you have signed describes the property, states the purchase price and terms, sets forth the method of payment, and usually names the date and place where the closing or actual transfer of the property title and keys will occur.  There meeting is also referred to as the settlement.

The title company transferring ownership of the property to you will prepare a new deed.  Your lender will require you to sign a document, usually a promissory note, as evidence that you are personally responsible for repaying the loan.  You will also sign a mortgage or deed of trust on the property as security to the lender for the loan.  The mortgage or deed of trust gives the lender the right to sell the property if you fail to make the payments.  Before you exchange these papers, the property may be surveyed, appraised, or inspected, and the ownership of title will be checked in county and court records.

What Should I do to Prepare for the Closing?

As previously mentioned, you should have already conducted any inspections, etc. you wish to have done on the property.

There are two kinds of title insurance.  A lender or mortgagee’s title insurance policy protects only the lending institution.  Lenders require there type of insurance and require the borrower to pay for it.  That does not mean that the borrower will receive its protection.  An owner’s policy is necessary to protect the owner against loss.

You will also be required to pay all fees and closing costs in the form of “guaranteed funds” such as a Cashier’s Check.  You will be notified of the exact amount by your agent or escrow officer at closing.

What is an Escrow Account?

An escrow account is a neutral depository for funds that will be used to pay expenses incurred by the property, such as taxes, assessments, property insurance, or mortgage insurance premiums which fall due in the future.  You will pay one-twelfth of the annual amount of these bills each month with your regular mortgage payment.  When the bills fall due, they are paid by the lender from the special account.  At closing, it may be necessary to pay enough into the account to cover these amounts for several months so that funds will be available to pay the bills as they fall due.  You may also be required to refund items prepaid by the Seller.  For example, if the Seller has paid the special assessments or taxes for that year, you may be required to refund the value of the months remaining in the year when you take possession of the property.  An escrow fee is usually charged to set up the account.

We’re Moving!

Now that you have a new address, send out all your change of address notices.

Complete your Change of Address notices and mail them to the following.  Keep in mind that the post office will forward your mail for 30 days but they do expect that you are sending notices to everyone who sends you mail.

  • Post Office
  • Friends and relatives
  • Magazine and mail order subscriptions
  • Professional organizations of which you are a member
  • Clubs, social or civic organizations with mailings
  • Charge accounts, insurance carriers, and creditors
  • Driver’s bureau to receive tag notices
  • Voter Registration officials

Don’t forget the needs of your furry friends! Do not transport your pets much farther than they have safely traveled in the past without consulting your veterinarian.  To transport animals by air, you need an airline-approved animal carrier.  A moving company can inform you of any state regulations for pet entry, vaccination or quarantine procedures.  Ask about regulations, licenses, tags, etc. for pets.  Also, do not forget to obtain a copy of your pet’s medical records.

Keep detailed records – some moving expenses are tax deductible! Keep detailed records of all moving expenses if your move is job related.  Many expenses, including house-hunting trips, are tax deductible.  If your move is 35 miles or more from your home, you can deduct your family’s travel expenses, including meals and lodging; the cost of transporting furniture, other household goods and personal belongings; food and hotel bills for up to 30 days in the new city if you have to wait to move into your new home; and the costs associated with selling your old home or leasing your new home. Note: There is a ceiling on deductions which is outlined in detail in the IRS’s Publication 521, “Tax Information on Moving Expenses,” available free form the IRS offices.

When you close on your new home, you should complete the following:

  • Ask your bank about electronically transferring your funds to a bank in your new area.  Discuss branch options and arrange for check cashing in your new location.
  • Close out your safety deposit box.
  • Obtain travelers checks for traveling funds and for funds while you are settling into your new location.
  • Ask your insurance agent to transfer coverage to your new home.  Make sure all coverage (life, health, automobile, personal belongings, etc.) is in force while you are en route.
  • Schedule a moving company to assist you or begin notifying people who are helping you of your planned move date.
  • Begin depleting your store of canned and frozen foods.  Defrost your freezer and use charcoal to dispel odors.

Now that you have a new address, you can begin transferring or canceling home services:

  • Electric and Gas
  • Telephone
  • Cable Television
  • Trash

Make arrangements for canceling home deliveries and services such as the following.  Arrange for service at your new address.

  • Newspaper
  • Cleaning Service
  • Lawn Service
  • Laundry / Diaper Service

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