Congratulations! You’ve made the decision to buy a home! Maybe this is your first purchase. Maybe it’s your fifth, but it’s been years since your last closing. Either way you’ve got tons of questions. What is a closing? Do you need a lawyer? How much does closing on a house cost? Read on to find answers to these common real estate questions!
What is a Closing?
When your lender, lawyer, or realtor refer to “closing” on your purchase, they are referencing the final step in the home-buying process…the end of your transaction. This typically takes place in the form of a meeting. You can expect to sign any documents required in order to complete your purchase at this meeting. These may include your final loan paperwork, like your Mortgage, and your Settlement Statement. A Settlement Statement (sometimes called a Closing Disclosure) is a detailed account of the incoming and outgoing money associated with your transaction. Basically, it shows who gets what!
How Many People Are Involved in My Transaction?
A common misconception is that a real estate transaction involves only a Purchaser and a Seller, but there are actually several people involved. Here are the 3 most common people you’re likely to interact with while purchasing your new home:
- The Realtor – This person most likely spent a great deal of time locating a home that met your specific needs. Once your needs have been met, the realtor then works hard to ensure that the rest of your home-buying process goes as smoothly as possible.
- The Lender – The Lender is probably one of the first people you met with after deciding to buy a home. They are responsible for determining how much you can afford to spend on your purchase, along with what financing options are available to you.
- The Lawyer – The Lawyer is a key individual in the purchase process. He receives information from the realtor and the lender regarding your purchase. Then, he uses that information to make sure that your new home can actually become your new home. He creates your Settlement Statement and then verifies it with all of the other parties involved. More often than not it is the Lawyer who walks you through all of the documents you need to sign, and then takes care of paying your costs.
How Much Are Closing Costs?
Closing Costs can vary from purchase to purchase. They are dependent upon several factors including, but not limited to:
- Purchase Price
- Closing Date
- Mortgage Company
You can expect to pay recording fees, which prove to the county that a purchase can and has been completed, abstracting fees, which ensure that you have the most up to date title information for the property, and loan and settlement fees, which compensate your lender and lawyer for the work they’ve done to get you into your new home. Check your lawyer’s website for a closing cost calculator that may be able to provide a more specific estimate of costs associated with your purchase.