Settlement date and closing date relate to the finalization of a real estate transaction. Technically, they are the same. It is the time when the seller receives the sale proceeds and the buyer pays any required expenses to close the transaction. Typically, the process could take as little one or two hours, unless it is a complicated transaction or there is a disagreement over the final paperwork.
What To Take To Closing
Since no two closings are exactly the same, make sure to ask your attorney or mortgage broker for a checklist of items to bring. Bring all of the paperwork generated during the selling or buying process. This includes the sales contract, proof of homeowners, mortgage and flood insurance with proof of payment, your appraisal, survey and inspection reports, especially termite inspection. Bring the mortgage contract and good-faith estimate. Anyone who will be an owner of the property needs to be present to sign the required documents. Consult with your attorney about the dollar amount of any certified check you are must bring to the closing. Also bring your personal checkbook in case you need to pay additional minor costs.
What You Can Expect at Closing
The settlement process varies from state to state. In some states, like New York, you’ll find a room filled with people. In addition to yourself and the seller, there will be your attorney and the seller's attorney. A representative from the mortgage company will be at the closing. If two real estate companies are involved in the transaction, both brokers may be present. Additionally, there will be a title company representative. As the buyer, expect to sign a lot of paperwork. Your attorney will have reviewed the documents, but be free to ask her to explain any number or document that you don’t understand. Occasionally there may be additional costs added at the last minute, so be alert. Make sure the interest rate on the mortgage papers is correct. Parties in contentious divorces may try to slip in unexpected charges. You may even find an unexpected bill from your attorney included in your pile of paper, requiring a check. If you feel something is significantly wrong, you can request a complete explanation and even stop the proceedings until you get authoritative information and clarity. Bringing a list of all professional contacts involved in your transaction -- both phone, fax, and email -- will give you extra confidence if you must pause the closing.
Finalizing the Calculations
You will see final calculations at the closing. While some numbers are straightforward, such as the selling price of the home, other numbers will vary depending on the closing date. If the seller has paid property taxes until the end of year, you will need to reimburse the seller for taxes paid from date of closing until year-end. On the other hand, if the seller has not paid property taxes through closing date, the seller will owe you money. Results of a last-minute inspection or walk-through may affect the selling price. You may see new numbers reflecting any needed repairs where the seller has agreed to reduce the selling price by rather than make the repair.
Take from the Closing
After closing and a final review at home, be sure to take all of your closing documents and place them in your safe deposit box. This includes a copy of every mortgage document that you signed, a copy of the title report, land survey and appraisal. While the original deed will be recorded at the local clerk’s office, make sure that you receive a copy. Finally, if you are the buyer, be sure you have all of the house keys in hand when the meeting is done.