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Closing On A House
The real estate closing is a process in which payment is transferred from buyer to seller and all legal paperwork completed and signed by both buyers and sellers.
Real Estate Closing
Closing – also known as settlement or escrow – is essentially a meeting where the closing agent (the party who conducts settlement) takes in money from the buyers, then pays out that money to the owner and makes sure that the purchaser’s title is properly recorded in local records along with any mortgage liens. All papers have been prepared by closing agents, title companies, lenders, and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get title to the property, lenders have their loans recorded in the public records, and state governments collect their transfer taxes.
The closing agent reviews the sale agreement to determine what payments and credits the owner should receive and what amounts are due from the buyer. The closing agent also assures that certain transaction costs are paid (taxes and title searches).
Closing is also the time when “adjustments” will be made. For instance, suppose the seller has pre-paid taxes four months in advance. In this case, the closing agent will compensate the seller for the prepayment at closing by having the buyer pay the additional money.
This also works in reverse. Suppose the seller is behind on property taxes. In that case, the closing agent will reduce the money due to the seller at settlement by the amount of the unpaid taxes.