Consumer's Guide to Closing on a Home

The Real Estate Agent, Mortgage Lender, Title Company, Buyer and Seller are primary participants in the closing of a home.

Most Buyers contact a state-licensed Realtor to help locate a home, negotiate the earnest money contract, select a lender and title company. The agent generally consults throughout the closing and can help customers make informed decisions.

The closing usually takes place at the Title Company. The company acts as escrow agent and title insurer. As detailed in the earnest money contract, the title insurance company may hold the earnest money, prepare the closing statement and coordinate with entities involved in the closing. Coordination includes collecting invoices and information from the Mortgage Lender, insurance agent, surveyor, attorneys for buyer - seller - Lender, tax search firm, mechanical and termite inspection companies, flood protection and title insurance underwriter. The title company researches the chain of title to your home and issues a commitment for title insurance reflecting the ownership, restrictions, easements, liens and other exceptions affecting the property. After closing an owners title insurance policy is delivered to the purchaser noting exceptions in the commitment and any additional exceptions created at closing.

Steps in the Closing Process

1. Buyer begins search for property: Searches internet, drives neighborhoods and/or contacts a Real Estate Agent

2. Real Estate Agent & Buyer chose home from computerized listing (mls) and home tours

3. Real Estate Agent completes earnest money contract. Buyer and Seller sign contract binding them to the sale

4. Title is "opened" at the Title Company named on the contract. The Title Company researches the title and produces a title commitment. Title issues are evaluated and resolved to provide clear title. Commitment is delivered to Buyer, Seller and agents.

5. Buyer selects Lender and the loan process begins. (Appraisal, survey, inspections, employment verification etc.). Lender verifies Buyer's prior loan history, employment, financial position, and appraised value of the home)

6. Loan is approved commitment is received and home inspection is satisfactory. (Buyer and Seller begin making moving plans)

7. Closing is set with the Title Company. Estimated closing statement is prepared and Buyer arranges for a wire transfer for down payment and closing costs.

8. Lender or attorney prepares loan documents and sends to Title Company.

9. Title Company coordinates the receipt of closing instructions from Lender, inspections and other charges from Buyer's insurance agent, a survey and other items required in the earnest money contract.

10. Closing takes place at Title Company: Buyers and Sellers sign closing documents and Lender funds the loan. Title Company allocates closing costs among Buyer and Seller according to the contract, Lender's instructions and local customs.

11. Title Company records the documents with the County Clerk. County Clerk accepts but does not evaluate the title documents.

12. Title Company disburses money to Lender (payoff of existing mortgage), Seller, Real Estate Agent and other fees including conveyance fees.

13. Title Company issues and delivers title insurance policies to Buyer and Lender.