Real Estate Closing Procedures: What They Mean for the Home Buyer

Finding a new home is just the start of your legal journey to home ownership.  The next step is drafting an offer to purchase, which can be done by an attorney or real estate agent.  Because of recent changes to government regulations to the real estate closing procedures, the last step of the transaction, closing, has seen some significant changes for lending agencies and home buyers.  Here’s what you, the home buyer, needs to know as you navigate through your real estate closing.Loan Estimate form
Forms
Three forms have disappeared from the closing table: the HUD-1, Good Faith Estimate, and Truth in Lending Act Disclosure.  In their place, the buyer should expect to see two nicknamed ‘Know Before You Owe’ forms: Loan Estimate and Closing Disclosure form.  The Loan Estimate form includes the loan type, terms of the loan, interest rate, estimated tax, insurance, and assessment figures, as well as other costs that affect the final cost to the property owner.  The Closing Disclosure has fields that detail closing costs, fees charged to the buyer and seller, and other figures that help all parties understand how much they need to bring to closing and loan-related costs.

Time period
One of the major real estate closing changes involves the time period the buyer receives documentation before closing.  Prior to October, closing documents were presented to the home buyer and seller usually on the day of closing. Under the new regulations, borrowers must receive documents three days prior to the closing date.  Once the buyer has completely reviewed and approved the documents, a borrower must indicate via email, phone call, or signature on a printed form that they have intend to proceed.

Closing Day
On closing day, the home buyer should bring all necessary documentation to the meeting such as (but not limited to) proof of homeowner’s insurance, Loan Estimate, and the Closing Disclosure form.  The home buyer also needs to bring any payments they want to pay for out of pocket such as closing costs, down payment, fees, etc.

If you have any questions about the closing process, or to draft an offer to purchase on your new home or rental property, contact an attorney. An attorney ensures compliance with the terms of the offer, reviews lending documents and title insurance, addresses title concerns, reviews closing documents, and overall makes sure the transaction proceeds as smoothly as possible.
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