CLOSING PROCESS
Depending on where you live, different individuals may handle the closing process. It could be an escrow officer, the title company or a real estate attorney.
Closing processes can vary widely even within the same state. In Southern California the escrow instructions are usually part of the residential purchase agreement (RPA-CA) and handled on the front end.
Before any escrow can close, all the terms of the purchase contract must be met. Once all terms have been executed by both parties, then the buyer deposits the funds and the seller deposits the deed. In the state of California, an escrow is considered “closed” on the date that the grant deed is transferred from the seller to the buyer and recorded at the County Hall of Records. There is no closing table, and no settlement room like some other states.
When the title insurance company receives confirmation of recording from their representative at the County Hall of Records, the title company will wire transfer all funds they are holding from the buyers lender to the escrow company. At that point, the escrow officer will begin the process of balancing the transaction and disbursing funds to payoff the seller’s existing mortgages, liens and any other payments (i.e., termite company) that the officer has been instructed to pay through escrow.
The buyer becomes the legal owner of the property the day the grant deed is recorded.
CLOSING COST
For the Buyer Estimated Closing Costs, the broker would need to know the loan amount, interest rate and what the lender fees are for the loan. Your best bet is to get the Good Faith Estimate from your lender.
Some typical fees associated for buyers:
- The down payment
- Buyer's portion of the escrow holder's fee
- Loan fees (points [aka: loan origination fee], application fee, credit report fee, tax service fee, flood certification fee)
- Appraisal fee
- Prepaid interest on the loan
- Private Mortgage Insurance (PMI)
- Impounds on the loan
- Fee for mortgage broker or loan agent
- Homeowner's insurance
- Buyer's portion of title insurance
- Inspection fees (if not paid for at the time of the inspection)
- Home warranty plan (aka home protection plan)
- Homeowner's association transfer fee and fee to provide documents
- Homeowner's association dues (prorated)
- Property taxes (prorated)
- Other fees as per the Purchase Agreement
- Miscellaneous fees (notary fees, messenger fees, etc.)
All of your closing costs will be spelled out in your final closing statement provided by the escrow company. Closing costs typically run 3 to 5% of the purchase price. That is why it is important to meet with a lender in the beginning of your real estate buying process and look at the costs involved so you can make wise decisions.