Eagle is committed to make your closing run as smoothly as possible,there is never a stupid question.
The Closing Process
Eagle is committed to make your closing run as smoothly as possible. If you have any questions regarding your closing please feel free to call and ask anytime. Since we have a deep understanding and appreciation for the consumer, there is never a stupid question. We will walk you through the closing process, one step at a time. Together we can make the closing process go quickly, efficiently and become a pleasant experience for everyone.
The keys to a smooth closing are good communication and adequate preparation. Eagle plays a key role in both areas, by acting as a clearinghouse for information and as an independent third party to handle and disburse the funds, prepare many documents and manage the closing process.
At Eagle we do a roundtable style closing. This means that typically all parties will come to the table and complete the transaction at the same time. However, if you need to make other arrangements by pre-signing your documents (if selling) or utilizing a Power of Attorney please make us aware of this situation way ahead of time. Also, budget about one hour for closing, however, most closings are done in less time.
Real estate closings should be a happy experience for all involved. The Seller is receiving money, the Purchaser is acquiring a new home and the professionals handling the sale are getting paid. Our 35+ years of experience at Eagle can help make sure your closing is a smooth one, with a happy ending.
The following sections offer a brief run-down on the typical closing process, explain “closing costs” and offers you some tips for a smooth closing.
The Road to Closing
The road to closing starts with the signing of the Purchase Agreement. This document determines the Sellers’ and Purchasers’ obligations to each other and sets out a timeline for the closing process. Besides specifying the price and identifying the property to be sold, the Purchase Agreement can allocate closing costs, specify the time for performance and set out what events (“contingencies”) may lead to the Purchaser not completing the transaction (e.g. – failure to obtain financing).
At the same time they sign the Purchase Agreement, the Purchasers will usually tender to either the real estate broker or the title company an earnest money deposit of 2-5% of the purchase price to secure their performance under the Purchase Agreement. Both Purchaser and Seller then proceed to remove contingencies and prepare for the closing. On the Purchaser’s side this usually means finding financing, insurance and hiring inspectors. On the Seller’s side, this means hiring a title company, obtaining payoff information on the existing mortgage(s) and making any repairs or remedies required by the Purchase Agreement.
When all contingencies are removed, the Seller and Purchaser work together with the title company and the Purchaser’s lender to establish a time and place for a closing that meets the parameters established by the Purchase Agreement.
Once a closing date and time have been established, the title company (and occasionally a real estate agent) will coordinate the activities of the Seller, Purchaser, Purchaser’s lender and other parties involved in the closing. The Seller will authorize the ordering of payoff(s) for existing mortgages, the Purchaser’s lender will supply its “closing costs” and loan documents to the title company and the title company will prepare the “Settlement Statements” based upon the Purchase Agreement and the lenders written closing instructions..
Closing documents are then distributed by the title company to the parties, their counsel and the real estate agents for review. This often happens very shortly before the closing, so do not be surprised if you receive your final closing figures the day before the closing. The closing is then conducted by the title company, documents are signed, funds exchanged and the transaction is finalized by placing the deed, mortgage and other documents on the public record.
The transaction concludes with the issuance of the title insurance policy to the Purchaser (usually within 30-45 days after closing) and the receipt by the Seller of their canceled mortgage loan documents from their lender along with any escrow account moneys, if any, remaining.
“Closing Costs” is a catch-all term that refers to the costs and expenses involved in closing a real estate transaction. These costs are determined by the contracts between the parties, applicable laws and local customs.
The following explanation of “closing costs” is based upon the standard Columbus Board of Realtors Purchase Contract and assumes typical closing expenses.
Seller Closing Costs
The Seller usually incurs the following “closing costs”:
1) Transfer Taxes. Ohio law levies tax on the sale and/or transfer of real estate. The tax is based on the sales price and is determined by the property’s county location. For example, Franklin County is 2.00 per thousand based upon the sales price of the home, so the transfer tax on a $200,000 home would be $400.00 plus a .50 cent flat fee paid to the auditor.
2) Title Examination. The Seller pays for the title examination. This fee is typically around $150-250 and is based on whether a full search has to be done or if a prior Owners Title Policy is provided to us before the search begins. This can save the examiner time and you money.
3) Title Insurance. The Seller normally purchases a title insurance policy for the benefit of the Purchaser. This should cost approximately $6.61 per $1,000 and is based on the contract sales price. For example, on a $150,000 home the title insurance would be $991.00. However, if the Seller can provide a copy of their existing title insurance policy to the title company then they may receive a “reissue discount” of 30% (if within 10 years). A title binder is also charged of $50 per policy.
4) Closing Fee. On a standard real estate closing transaction the closing fee would be $100-$400 to the Seller and this is to cover the cost of numerous functions such as: Obtaining payoffs, clearing the title, preparing the settlement statements, disbursing the transaction and performing the actual closing of signing the documents.
5) Water/Utility. Because it may not be possible to get the final water/utility bill readings prior to closing, it is not unusual to have the title company have the Seller sign an affidavit as to any unpaid bills. It is the Sellers responsibility to finalize the bill and have the service terminated and transferred over to the Purchaser.
6) Inspections. Sellers sometime pay for the termite inspection ($50-$100). Also, if the property is served by a well and septic system, the Seller may also pay for any required inspections by their local government.
7) Tax Prorations. Sellers can also expect to give a “tax proration” credit that will benefit the Purchaser. This credit is to reimburse the Purchaser for a portion of the property taxes not yet paid by the Seller for the preceding tax period. Credits may also be given for Condo fees, homeowners association fees and other prepaid services.
8) Miscellaneous. Sellers may also pay the following miscellaneous expenses: a) recording fees on Powers of Attorney, tax liens or other documents that the Seller may be responsible for recording ($28.00 for the first page, $8.00 for each additional page); b) Courier fees to overnight loan payoffs ($15-$25); c) wire transfer fees to wire proceeds – wire transferred to their bank ($20-$30); and d) attorneys’ fees for preparation of deed and property transfer affidavit ($45-$100); e) Realtor admin and compliance document fees ($124-$250).
Other Seller Costs
The Seller will also be responsible for the following other payments at closing, although these are not usually deemed “closing costs”:
1) Real Estate Commission. If a real estate broker or agent is involved in the transaction, the Seller will normally pay a commission of approximately 6% of the sale price. This cost is determined by the terms of the listing agreement – a contract between the Seller and the real estate agent. Occasionally the Purchaser may pay part of the commission, but only if a “Buyer’s Broker” agreement has been reached between the Purchaser and his real estate agent.
2) Mortgage payoffs. Payoff Statements need to be obtained for all Mortgages. The Seller should be careful to not use their home equity credit line prior to closing and will need to bring in all unused home equity checks and debit cards to closing.
3) Payment of delinquent taxes. All delinquent taxes and assessments will need to be paid to allow recording of the deed and issue of the title policy.
4) Payoff of all current and any “special assessments”. Special Assessments are a specific type of property tax levied against some properties for street lights, street paving, sewer service or other public improvements that benefit the property. Most Purchase Agreements require the Seller to pay these taxes off in full, as the Purchaser usually assumes that all public improvements have been paid for by the Seller.
5) Attorneys’ fees. Selling a home is a major event with significant financial and tax considerations. A Real Estate Attorney will be able to give you critical advice about the many consequences of your transaction. Typically, attorneys’ fees of $450-$1000 will probably be incurred on a simple residential transaction. If the attorney is involved in lengthy negotiations, or if there are title defects or other problems or issues with the transaction, expect to pay more.
Purchaser Closing Costs.
The “closing costs” paid by the Purchaser can be divided into two categories
Sale Costs The following items are typical sale closing costs paid by the Purchaser:
1) Inspection Costs. The Purchaser usually pays for the termite, gas, well and septic, radon and home contractor’s inspection reports. These range in total cost from $200-$800.
2) Recording Fees. Recording fees of $28.00 for the first page and $8.00 for each additional page on the deed and mortgage are usually paid by the Purchaser. Expect to pay $132-$200 depending on how many documents are recorded.
3) Survey Costs. The Purchaser usually pays for the cost of the Survey. A typical mortgage location survey on a standard subdivision lot can cost between $175-$250. Metes and bounds legal descriptions and acreage will cost even more.
4) Miscellaneous. Purchasers may also pay the following miscellaneous expenses: a) recording fees on Powers of Attorney or other documents that the Purchaser may be responsible for recording ($28.00 for the first page, $8.00 for each additional page); b) Courier fees to ship mortgage loan documents ($15-$25); c) Realtor admin and compliance document fees ($124-$250).
5) Homeowners Insurance. The Purchaser is usually required by their lender to purchase a full year of property casualty insurance.
6) Attorneys’ fees. Buying a home is a major event with significant financial and tax considerations. A Real Estate Attorney will be able to give you critical advice about the many consequences of your transaction. Typically, attorneys’ fees of $450-$1000 will probably be incurred on a simple residential transaction. If the attorney is involved in lengthy negotiations, or if there are title issues or other problems with the transaction, expect to pay more.
Loan Closing Costs Loan closing costs vary tremendously based upon the type of loan and whether or not a Purchaser is paying discount “points” to “buy down” the interest rate on the loan. Typical loan closing costs include loan origination fees, appraisal ($250-$400); credit report ($25-$75); document preparation ($100-$150); underwriting ($100-$300); loan closing fees ($300-$400); title insurance and endorsements ($100-$400); and courier fees ($50-$150).
In addition to these loan closing costs, the Purchaser will also usually need to bring money for two other significant items that are not really “closing costs” — prepaid interest and escrow deposits.
Prepaid interest. This is a charge from the lender at closing to cover the interest accruing on the loan for the remainder of the month during which the closing takes place. This is because lenders collect interest “in arrears” — your February 1 payment covers January interest. The prepaid interest allows the lender to start the accrual of interest on the first day of the month following closing. The good news to Purchasers is this means no mortgage payment the first month after closing! Just remember, the earlier in a month you close, the more prepaid interest will be collected at closing.
Escrow Deposits. The second major expense that Purchasers fund at closing is their “escrow deposits — funds that are given to the lender so that they can pay the property taxes, homeowner’s insurance and if applicable, private mortgage insurance (PMI). The amount collected by the lender is limited by federal law and you will receive a disclosure at closing explaining how the amount being withheld was calculated. A safe “guesstimate” of escrow deposits will be one-half of the annual property taxes and homeowners insurance — more if you are closing close to June 1 or December 1, the dates on which most county property taxes are due.
The Closing Checklist
Buyer to bring the following:
- Photo identification (passport, driver’s license, or state-issued identification card)
- Proof of purchase of Homeowners insurance for fire, casualty, etc. Bring the Policy or Declaration page showing your new lender as the lost payee.
- Any funds required for closing must be via Wire Transfer – per Ohio Revised Code Section 1349.21 law requires “good” funds available at the closing table and bring your personal checkbook for any last minute adjustments.
- Invoices and reports such as Home Warranty, Termite/Gas, Home Inspections, any other bills
- Any additional documentation that your Loan Officer has asked you to supply
- Original Power of Attorney, if applicable (Note: POA’s must be pre-approved by your lender and our underwriting department before the closing)
- Married individuals both need to attend the closing whether your spouse is going to be in title or not. Even if spouse is not in title, they will still have to sign the Mortgage to release their dower interest.
Seller to bring the following:
- Photo identification (passport, driver’s license, or state-issued identification card)
- Invoices and reports such as Home Warranty, Termite/Gas, inspections, unpaid taxes, utilities, assessments, any other bills
- Receipts for any real estate taxes paid within the last two weeks of closing
- Any unrecorded instruments that affect the title to the real estate
- Proof of satisfaction of any mechanics’ liens, judgments, or mortgages that were paid prior to the closing
- Any items you wish to pass on to the Buyer such as association payment coupons, warranties, appliance manuals, keys, garage door openers, etc.
- Original Power of Attorney, if applicable (Note: POA’s must be pre-approved by your lender and us before the closing)
- Any funds required for closing must be via Wire Transfer – per Ohio Revised Code Section 1349.21 requires “good” funds available at the closing table.
- Married individuals both need to attend the closing whether your spouse is in title or not. Even if spouse is not in title, they will still have to sign the Deed to release dower interest.
F.A.Q and other resource: