REAL ESTATE BUYERS


What Is a "Closing"?

A real estate "closing" is the process by which ownership or "title" to the property being purchased is transferred from the seller to the buyer. The closing is also where the buyer s mortgage loan that is financing the purchase, if the buyer is using such a loan, is finalized. A closing takes place only after the buyer s mortgage lender approves the loan application and processes the loan, the background title check on the property is complete, and the closing attorney has confirmed that there are no obstacles to closing the sale. In Georgia, all of the involved parties meet at the closing to execute the necessary documentation to transfer title to the property from the seller to the buyer. Closings take place under the direction of closing attorneys like us. If there is a mortgage loan, the lender must approve the closing attorney, and the closing attorney represents the mortgage lender. In a cash sale, on the other hand, the closing attorney represents either the seller or the buyer, usually whoever pays closing costs.

Who Attends the Closing?

Generally, a closing is attended by the buyer(s), seller(s), their respective real estate agents, and, in some cases, a loan officer from the buyer s mortgage lender. Anyone who is to sign the closing documents must attend the closing in person unless special arrangements are made (see below). For example, if two buyers are married and both the husband s and the wife s names appear on the loan, then both the husband and wife must attend the closing in person. If you are purchasing property with a spouse or another party but are not on the loan, however, you may not be required to attend the closing. (Of course, you certainly may choose to do so.) If your name appears on the sales contract but not on the loan, always double check with us near the closing date to confirm whether or not you need to attend the closing. Some lenders will require all buyers to sign some documents, even if one of the buyers is not named on the loan.

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What If I Cannot Attend the Closing and I Am on the Loan?

If you are unable to physically attend your closing, in some special cases you may be able to close by Power of Attorney. In such a case, you would execute a specific real estate Power of Attorney form granting another party the power to execute closing documents on your behalf. Note: the language used in a General Power of Attorney does not comply with the legal requirements of a specific real estate Power of Attorney. Furthermore, your lender will not allow you to close by Power of Attorney without its prior approval of your reasons and your Power of Attorney form.

Thus, please notify us as soon as you realize that you are unable to attend your scheduled closing. We can prepare a proper, specific real estate Power of Attorney for you and contact your lender for its permission and approval. Please be aware that there is a preparation and recording fee associated with the Power of Attorney.


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How Do I Determine Whether I Need to Bring Money to the Closing and, If So, How Much I Should Bring?

Your lender can tell you whether or not you will need to bring money to the closing. Your good faith estimate is a good starting point and your lender may have more specific information as your closing approaches. If you do have to bring money to closing, you will have wire funds from your bank (see Buyers Closing Checklist below).

Many times we can tell you a fair pre-estimate of what to bring to closing once your lender transmits their final closing instructions to us. Generally, we can do this between 12 to 4 hours before your closing, depending upon when we receive the instructions. Either you, your mortgage broker or loan officer, or your real estate agent can contact us for the figure. (Please note, sometimes numbers are adjusted or can change at closing. If you wire a little more than you ultimately need, it will be refunded at closing; if you are a little short, you will have to send an additional wire.)


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How Do I Have Funds Wired To You?

Please contact our office with your bank s wire contact name and fax number. We will fax wiring instructions to your bank. (Please note that there will be a nominal wiring-handling fee for wires received by our bank and your bank may charge a wiring fee to you as well - check with your bank.)

What Are "Joint Tenants with Right of Survivorship" and "Tenants in Common" - Is There a Difference?


When more than one person buys or owns property together, they can hold title to the property in several ways: Either as "joint tenants with right of survivorship" (abbreviated as "JTWROS"); as "tenants in common"; or as separate individuals with distinct and severable interests in the property.

"Joint tenants with right of survivorship" means that each owner has a whole, undivided interest in the entire parcel of property. (Not that one owns the western half and the other the eastern half, for example). Upon the sale of the property, each owner would get one-half of the total proceeds. Because the owners have a "right of survivorship", if one were to die before the other, the deceased owner s interest would pass automatically to the surviving owner. The deceased owner s interest does not go through probate and cannot be given to an heir or devisee. This can be a great estate-planning tool. Most married couples or families with elderly members hold title this way to minimize administrative/ probate delays and consequences.

"Tenants in common" also means that each owner has a whole, undivided interest in the entire parcel of property. However, with no right of survivorship, if one tenant in common dies before another, the deceased s interest does not automatically pass to the other. Indeed, it could be devised to another person or, if the owner died without a will, then the interest in the property would pass to the deceased owner s legal heirs through probate.
Finally, if individuals hold distinct and separate interests, e.g. a divided "one-quarter" or "one-half" interest, then the individual has exactly that - a partial interest in the property in the amount stated.


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Home Buyers Pre-Closing Checklist

Before the day your closing is scheduled, we must receive some information from you in order to prepare and obtain the necessary legal forms for your closing. In fact, we must receive some of this information well-before your closing to avoid delays and postponements.

  • The Sales Contract: You will need to be sure that our office has received the most up-to-date version of your sales contract. This includes any amendments that affect the sales price, the amount of earnest money paid, and that relate to or specify any repairs to be made or paid for by the seller.

  •  Homeowner's Insurance: You will be required by your lender to obtain "hazard" insurance - aka homeowners insurance - for your new home before Closing. The policy must provide coverage in the minimum amount of the mortgage loan you are obtaining and must name your mortgage lender in the "mortgagee clause."
    Once you set up your policy with your insurance agent, have your agent fax a copy of the declarations page to our office so that we can confirm this for the lender.

  • Survey: If your contract or your lender requires a survey, then you or your agent must order the survey from a registered land surveyor in time for it to be prepared and reviewed by us and/or your lender before the closing. You may pay for the survey in advance or we can include the survey cost on the settlement statement at the closing.
    Note, in the past lenders rarely proceeded without requiring a new survey for closing. Today, lenders require surveys less and less frequently for conventional loans. A survey is almost always required for new construction, FHA or VA loans, however. You can learn more about surveys below under "Optional Services to Protect Home Buyers." After you read this information, you may determine that you wish to obtain a survey before closing even if it is not required by your lender or in your sales contract.

  • Employer Contributions to Closing/Relocating Costs: If you are relocating due to a company transfer, your employer may contribute funds toward your closing costs. If your employer has agreed to do so, please contact our office with the name and telephone number of the contact person at your company who is handling this on your behalf. We must have this information before closing so that we can give you an accurate estimate of the funds that you will need to bring to closing.

  • Miscellaneous Lender Required Information: It is not unusual for a Lender to require you to pay certain debts, write letters of explanation regarding your credit, or provide income tax information in order to obtain a loan. Sometimes these requirements will be taken care of directly between you and your lender. Please check with your lender prior to closing to verify whether there are any additional requirements.

  • Termite Letter/Soil Treatment Guarantees: Before funding your mortgage loan, lenders almost always require a "termite letter." This letter assesses the home s termite infestation status, showing that the home is free from termites or has been made free from termites. The termite letter may be dated no more than 30 days before the closing. Typically, it is the seller s responsibility to obtain and pay for the termite letter. (See the Georgia Association of Realtors form contract.) If your contract provides otherwise or does not address this subject, you must obtain and bring an original termite letter, prepared no more than 30 days before the closing date, to closing.
    Because some loan programs, like FHA and VA, require certain language to be on the termite letter, we recommend that you fax a copy of the termite letter to our office before closing to help avoid delays or postponements due to missing language or outdated letters.

Some contracts and lenders -- and virtually all FHA and VA loans -- also require "soil treatment guarantees" on new construction (in addition to the termite letter). The guarantee shows that the soil on the property has been treated with an appropriate preventative measure. The same termite service provider that provides the termite letter can supply this form if you request a treatment and guarantee when you order the termite letter. Because we do not receive your lender s loan instructions until just before your closing, we cannot tell you in advance whether a guarantee will be required. You should inquire with your lender about this.


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Home Buyers Closing Checklist

What to bring to closing:

  • You (and anyone named on the loan or in the contract as a buyer).

  • 1 form of valid photo ID (drivers license, state identification card, passport, or military ID); and 1 additional form of valid ID. Everyone signing a document at closing must provide a valid photo ID and an additional valid ID.

  • Original homeowners insurance policy covering property to be purchased in the amount required by your lender.

  • Certified funds sufficient to cover the estimated amount you need at closing and your personal checking account book just in case the estimated amount is short. (We cannot accept personal checks over $1000.00).

    • Have cashier s check made out to us or you (you endorse to us at closing)
    • To have funds wired to us, contact us to have wiring instructions faxed to your bank (there will be a nominal wiring fee by our bank and your bank may charge a fee)
  • Any information or documentation requested by your lender (tax returns, marriage certificates, social security cards, HUD-1 or settlements statements from recent sale of other property, etc.)

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Why Are These Things Required?

  • You (and anyone else named on the loan or in the contract as a buyer)

    • Unless one of you has executed a specific real estate Power of Attorney with our assistance and your lender s prior permission, then everyone named on the loan must be at the closing to sign in person. If someone is named as a buyer in the contract but is not named on the loan, contact our office to determine whether he or she needs to attend the closing. Sometimes the lender requires other buyers to sign certain documents at closing even if they are not on the loan.

      If you have executed a specific real estate Power of Attorney with our prior assistance and your lender s prior permission, you must send the original, signed, witnessed, and notarized Power of Attorney to us before the closing.

      You also will be required to call our offices when your closing is scheduled to begin so that we can confirm your permission to proceed and execute a required certification that we did so. Finally, the person to whom you granted the Power of Attorney will have to attend the closing and bring a valid photo ID.
  • 1 form of valid photo ID (drivers license, state identification card, passport, or military ID); and 1 additional form of valid ID. Everyone signing a document at closing must provide a valid photo ID and an additional valid ID.

    • Each person signing any document at closing must provide valid identification. This protects you from fraud and your lender requires us to check and obtain a photocopy of your identification to make certain that no imposter is executing documents in your name.
  • Original homeowners insurance policy covering property to be purchased in the amount required by your lender

    • Your lender will require us to remit to them a copy of your homeowners insurance policy to evidence that the property and home are sufficiently insured. Your insurance agent can provide you with a duplicate original for closing.
  • Any information or documentation requested by your lender (tax returns, marriage certificates, social security cards, HUD-1 or settlement statements from recent sale of other property, etc.)

    • Lenders also commonly request that borrowers bring copies of past tax documents, marriage certificates, or HUD-1s/settlement statements from previous closings. If your lender requests any documentation or information from you, you MUST bring these items to the closing. If you do not, the lender will refuse to fund your loan. Additionally, if your lender requires you to pay off certain accounts or creditors at closing, you may wish to bring the latest relevant account statements. This will help ensure that we have accurate and current information.

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Optional Services that Protect Home Buyers

Surveys

Lenders less and less frequently require borrowers to obtain a new survey as a condition to a conventional home loan. (FHA and VA loans almost always require a new survey.) As a home buyer, however, you may wish to purchase a survey on your own accord for the protection and benefits they provide.

Essentially, a survey is a map of the property drawn by a registered land surveyor to clearly delineate and show the property boundary lines, total acreage, and exact location of the house and other improvements. The surveyor also will indicate whether and where any easements, building lines, or county set back lines exist on the property. By obtaining a survey, you can determine if the property violates any county requirements or homeowners association restrictions. The survey also will show any encroachments from neighboring property. That is, a survey will reveal if your soon-to-be neighbor has a fence, driveway, garage, etc. that that extends over the property line.

Frequently, we hear home buyers discount the importance of a survey when they are buying new construction because they apparently believe that there can be no encroachment issues in new construction. While the builders and developers in this area are very careful, new construction does not necessarily obviate the need for a survey. Building set-back violations and driveway encroachments have been revealed on new construction surveys.

Additionally, some buyers wonder why you would need a survey if a plat of the subdivision has been recorded. A subdivision plat shows where the boundary lines of each lot in the subdivision are supposed to be and where building lines, homeowners association restrictions, set backs, drainage easements, and access easements exist. The plat, however, does not display the actual location of the house or other improvements on the property in relation to these restrictions. Only a survey drawn for the property will reveal this information and where the lot lines indeed fall.

Typically, the cost of a routine survey is about $400-450 for an average sized property in the Coweta/Fayette area. Of course, the cost will increase for a larger tract of land or if there are complicated or numerous easements, encroachments, or improvements the surveyor must document. If you decide that you wish to obtain a survey, contact a registered land surveyor and let our office know to when to expect the survey. (Please be advised that surveyors need as much notice as possible to prepare and complete your survey in time for a scheduled closing, and we must have sufficient time to review the survey prior to the closing.)


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Owners Title Insurance


When your new lender provides you with your Good Faith Estimate, you will notice a charge for "Lender s Title Insurance." Generally, title insurance protects the holder of the policy in cases where a third-party makes a claim to the title of the property. The claim may be based on an assertion of fraudulent conveyance or a forged document, etc. The title insurer will defend the policy holder s title. Thus, a lender s title insurance policy protects only the lender s interest as the policy holder. Such a policy will not protect the home owner s interest. Therefore, if a claim is asserted after you purchase the property and you do not have an "Owner s Title Insurance Policy," you would be required to expend your own funds defending the claim. And, in the event there is a loss of title, you could lose your home and all your equity. If you hold an Owner s Title Insurance Policy, however, the Title Insurance Company will pay to defend the claim and will reimburse you for the value of your equity in the home if there is a loss of title.

You may wonder why you might need title insurance if we examine the property title prior to closing. This is because a title exam checks all matters "of record" affecting your title meaning documents that have been filed at the county courthouse. Title insurance protects against unrecorded matters. For example, some deeds or documents affecting property title may not be recorded yet (it may be weeks, even months before some documents are noted in the courthouse index), may be misfiled or misindexed and would never show up on an exam, or may not be filed at all. Additionally, a title exam cannot determine whether or not a deed or document was forged or whether fraud was involved in a past conveyance. These are the type of risks that an Owners Title Policy will insure you against. These are all examples of previous title disputes that could not have been detected by a title exam.

The cost of an owner s title insurance policy is a one-time fee once you purchase the policy, it is effective for as long as you own the property. The cost of the policy is determined by a rate chart issued by the title insurance company. The lowest rate, a simultaneous issue rate, is offered at closing or within 30 days of closing. After that, as the insurance company s risk increases, the rate goes up considerably.

If you would like to know how much a policy will cost, please contact our office, and we will be happy to calculate the fee for you. It is our policy to list the rate for your Owners Title Insurance Policy as an optional charge on your settlement statement. If you wish to purchase the policy for that rate, you can let us know at closing or within 2-3 weeks after so we can provide it within the thirty day simultaneous issue rate window.


 

 

 

 

 

 

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