Finally, the big day has arrived! Your loan has been approved and you are ready for closing (also called ‘settlement’). Depending on where you live, this last step can vary. In the western part of the country the closing is done “in escrow.” The escrow agent collects all of the required documents from the seller and the lender; collects money from the lender and the buyer; prepares the deed and the HUD-1 Settlement sheet; disperses funds to pay off any existing loan plus other closing costs; and then delivers the deed to the buyer. In the rest of the country closings are done “face-to-face” with some or all of the following people at the table:
- the sellers
- seller’s attorney (optional)
- the buyers
- buyer’s attorney (optional)
- the settlement agent or settlement attorney
- the lender’s representative (optional)
- the builder’s representative (for a brand new home)
Finalizing the Contract
The closing time, date and place are set up by the real estate agents representing the buyer and seller, and are coordinated with both the settlement agent and the lender. It is important to recognize that the settlement agent (or attorney) does not represent either the sellers or the buyers. He or she is there to represent the contract; in other words, to make sure that all terms of the contract are being fulfilled as agreed. If either the sellers or buyers anticipate legal problems at settlement, they should bring their own attorney to represent their interests. The settlement agent will assist with resolving issues that come up as a result of the final walk-through inspection, but any final decisions must be made by the parties to the transaction. If an agreement cannot be reached, the closing may be postponed or cancelled.