What takes place during the closing of a Frederick home purchase? Here are some definitions that will help you understand the process.
Closing or Settlement - The house is sold when the buyer and seller have reached a “meeting of the minds” and the contract has been agreed upon by all parties. The settlement, or closing, takes when all money is transferred and the title is transfered and the deed is signed. In Maryland there are no “dry settlements”, only “wet settlements”, meaning the money must be transferred.
Closing Procedure - A closing involves the completion of two basic issues:
1. The requirements made in the real estate sales contract are fulfilled, and
2. The mortgage lender disburses the loan funds.
The buyer, seller, their respective agents, and the closing agent or lawyer are usually at the closing. If everthing is done properly between the date the contract is ratified and the closing, the settlement should only take 1 hour.
The buyer’s Issues: The title evidence, seller’s deed, any documents demonstrating the removal of liens and encumbrances, the survey, the results of any inspections, any leases if there are tenants and the termite inspection report.
The seller’s Issues: Receiving payment, compliance with contract requirements.
Closing Statement - The Buyer and Seller should get a closing statement (HUD 1) 24 to 48 hours before the settlement so that they know all the charges that they will be responsible for. The statement is an estimate, but should be very close to the exact amounts. Buyers should bring a certified check of the amount owed. And, unfortunately, in today’s market, some sellers will need to bring a certified check as well.
Closing Fees - There are 7 categories of fees:
1. Broker’s commission: paid by seller.
2. Closing Attorney’s fees.
3. Transfer Tax: Split 50/50, unless otherwise negotiated. Maryland waives the first-time homebuyer’s half.
4. Recording expenses.
5. Title expenses: In Maryland the buyer orders a title search and a binder for title insurance.
6. Loan Fees: The loan origination fee is 1 to 2 % of the loan, paid by the buyer. They may also have discount points to buy down the interest rate. There are other survey fees, appraisal fees, and document fees. Other fees can be accrued items like water bills, prepaid items like fuel.
7. Insurance Reserves and Tax Reserves: Most lenders require buyers to provide reserve funds or escrow accounts to pay for future real estate taxes and insurance.
The Highland Real Estate Group
Chris & Karen Highland * 301-831-9947
Real Estate Teams, LLC
email us: isell4u2@msn.com