What is a Real Estate Closing?
Closing involves the transfer of the property title from the seller to the buyer. It is the last phase of mortgage loan processing.
How Does a Closing Work?
This process is overseen by a closing agent, who is often an attorney or an official from a mortgage company, and is carried out at the title company or escrow office. The process is different in various states, and it’s called a closing since it involves the closing of the escrow account used in the completion of the property buying process. When closing, the participants conduct a review and authorize as well as date a variety of legal documents. The closing disclosure is obligated under federal law to outline all the costs related purchasing such as the loan fees and other expenses. The loan amount, rate of interest, payment schedule, and the duration are presented on the promissory note. This note also provides the all the penalties that the lender can inflict on the borrower should he fail to make regular mortgage payments. A deed of trust is a type of security asset, also known as a mortgage in some states, which is used to pledge a property as security for a loan. A certificate of occupancy is required to determine whether a new property has fulfilled the local building code and laws. Every borrower under the transaction is allowed three business days to cancel a new mortgage loan by the notice of right to cancel. After the closing documents are signed, the borrower’s right to cancel ceases to exist. A contract drafted between a title insurance underwriter and a lender is known as a closing protection letter. The underwriter accepts to reimburse the lender for any losses resulting from particular misconducts by the closing agent. Closing agents are usually authorized by title underwriters to issue these closing protection letters to lenders if the closing agents expect that they will issue the insurance policies of the title underwriters in the transaction. Majority of the letters make a third-party beneficiary from the borrower in a purchase transaction. Standard closing protection letters cover inability to adhere to clearly stated closing instructions if the said instructions do affect the validity, priority or the enforceability of the mortgage lien or if they necessitate the closing agent in obtaining, but not providing assurance for the effectiveness, of a particular document, or relate to the collection of the funds owed to the lender. These letters also covers fraud resulting from the improper management of documents or funds belonging to the lender.
