In the Author's Corner: Sandy Gadow
How To Avoid Problems At Your Closing
And How To Save Money In The Process
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Sandy Gadow is the author of All About Escrow and Real Estate Closings, a comprehensive book that gives you the straight facts about title, escrow, and closings in an easy-to-read format. |
"Closing" or settlement is listed as one of the top ten problem areas that occurs in a real estate transaction. This final step to your purchasing property can go smoothly -- if you take a few precautions beforehand. Knowing what questions to ask and reviewing all documents in advance of the closing day, will prepare you for a hassle-free and smooth closing. Can you learn to save money at closing? Yes, you can.
What should you do first?
Shortly after signing the purchase agreement and placing your deposit money in an escrow account, you should determine which title company or attorney will be handling the title search and who will be preparing the closing documents. You will want to review the abstract of title and survey and determine the manner in which you will hold title. Don't rely on second-hand advice. Consult your tax advisor or tax attorney for the most appropriate way to hold title for your circumstances. Refer to All About Escrow and Real Estate Closings for a detailed description of your different options.
If you will be obtaining a loan, you should start shopping for the best loan terms immediately. Don't be satisfied with the first lender you talk to. Shop around and compare interest rates, points and loan types and terms. Carefully review all loan disclosure documents that you will be asked to sign and ask for an explanation of any fees don't understand. After your loan is in place and your interest rate is locked-in until the closing date, being to shop for the best title insurance rates. Ask for the "promulagated rate" or the lowest rate allowed under your state law. Ask if a "re-issue" or discounted rate is available on the property which you are buying.
What is Title Insurance?
Title insurance protects you from any shady dealings, forgeries, divorce claims, or other peculiarities which may have occurred in the past. A grant deed by itself does not necessarily give you clear title to a property; there may be outstanding claims and rights which cannot possibly be determined from the deed alone. Refer to All About Escrow and Real Estate Closings for an explanation of "easements" and "liens and encumbrances," which will relate to your use of the property you are buying.
If you will be obtaining a mortgage, you will be required to obtain two title insurance policies, one for the lender and one for yourself. You will be charged a "simultaneous issue" rate for both policies. The protection under your homeowner's title policy will continue for a long as you own the property. Even when an insured dies, his heirs or devisees remain protected under the terms of the policy. The lender's policy, on the other hand, remains in force only as long as the loan remains in place.
Don't neglect the important step of having the property inspected by a licensed building contractor or inspection service. Ask to see a current pest report on the property, the age and condition of the roof, plumbing, and electrical systems. Ask if the property is located in a flood zone and check the elevations. Negotiate any necessary repair work with the seller well in advance of your closing date. Disagreements over pest and corrective repair work often cause delays and problems at closing if not resolved beforehand.
Refer to All About Escrow and Real Estate Closings for an explanation of "personal property" items which will remain with the house upon the sale and which items the seller may take with him. There are five legal tests which may be made to resolve when a buyer and seller cannot agree whether something, such as a chandelier for example, is real property or personal property.
You should have reviewed your closing documents, your loan papers, your abstract of title, your survey, etc., before you sit down to sign the final closing papers. Although these documents are often prepared the day of closing; don't be rushed into signing anything without thoroughly reading and understanding what you will be signing. Request to see the documents before the closing, so you can take them home and read them thoroughly. These are important legally binding documents, and you will have to abide by their terms for as long as you own the property. You don't want a hidden clause or "loop hole" to come back to haunt you later.
Sandy Gadow is a title officer with more than 35 years experience in escrow, title and real estate related fields. She has helped thousands of people buy their homes. She is a licensed mortgage broker and a member of the California Escrow Association. She frequently lectures for the Florida Land Title Association and has appeared on local radio talk shows.
Visit Sandy's home page at https://sandygadow.com/.
Sandy's latest book, "The Complete Guide to Your Real Estate Closing" can be ordered via Amazon from her website.
