More on closing
A couple of weeks ago we discussed the importance of final documents leading to a solid transaction without surprises. There can be so many documents involved in the process of transferring real estate that sooner or later some folks just want to get on with it. Understandable but this late in the game is no time to become cavalier about what is possibly the largest investment of your life.
Prior to signing a rather large stack of required documents — like those that give permission for the IRS to review your past three tax returns or a list of assumed names that may have been associated with you or used by you at some time in the past. Usually this will cover names assumed from prior spouses, or in many cases, the name prior to assuming a new legal name deemed more appropriate by its user. There are many more interesting documents to come but first things first.
Second only to the loan agreement, if money is borrowed for the purchase, the most important document you are likely to sign at that escrow table is the settlement statement. Your escrow officer may refer to this document as “the HUD” because it is a requirement from the Department of Housing and Urban Development (HUD). This document will detail the amount of money you are paying for the property and how that money is being distributed.
If you are a buyer with financing from a third party the settlement statement will reflect the amount you are borrowing, the fees the lender is charging you for the loan or origination fee, appraisal fees, points or money you agreed to pay the lender to buy down an interest rate, etc. Of course you will check those fees and they must reflect the charges illustrated to you by the lender after qualifying for the loan. If the documents do not match within government guidelines the closing will be delayed while the buyer rethinks their borrowing terms. Pay attention to make sure you do not approve payments that may have already been made or for charges you may not agree with. If you paid cash for an appraisal for example, but the settlement statement reflects an appraisal fee you will want that corrected before signing.
As a seller you too, want to make sure the things you agreed to are the only things reflected in the settlement statement. Those items will include the owners’ title insurance guaranteeing clear title, brokerage fees and commissions if any, and taxes. If you have agreed to help the buyer with their closing costs that amount will be reflected here.
Since in Idaho we are liable for this year’s taxes next year, those taxes will be estimated to be the same as the prior year and will be credited to the buyer effective the date of closing. Any seller prepaid items such as homeowners’ association fees, water assessments, garbage service, sewer, or others will have any excess credited to the seller. The seller will want to be sure to watch for these items on the settlement statement before signing.
There are many other documents that come into play in a transaction with the preliminary title commitment and the settlement statement among the most critical. Make sure you and your agent review these documents to avoid costly errors and get you safely through your transaction.
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Trust an expert…call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
Kim Cooper is a real estate broker and the spokesman for the Coeur d’Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d’Alene Association of Realtors, 409 W. Neider, Coeur d’Alene, ID 83815 or by calling (208) 667-0664.