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Closing

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The big day is here: the day on which, officially, you become a homeowner. You're going off to "settle" the deal, to "close" on your new home. What's going to happen? What should you expect, and what do you need to bring?

Who will be present?

You, the buyer, will be present, along with your team, which likely includes your real estate agent and your settlement attorney. If you have an especially amiable and service-oriented mortgage broker, he may be there on your behalf as well, though that is unlikely.

On the other side of the table will be the seller(s), the seller's agent, and possibly an attorney for their team.

When the referee blows the whistle, the ball will be tossed straight up into the air. Generally, the tallest person on your team will want to do the jumping.

No, wait! That's something else. Never mind.

How long will this take?

This depends on how smoothly things go. It's likely to take about one hour for you to sign all the paperwork. (This is another reason that you do not want to go into something like this without some help. If you've bought the house without a real estate agent, you definitely want a good settlement attorney to be with you before and during closing.)

If there are surprises (see below) at closing, it will take longer.

What do you need to bring?

You're probably working with an agent, so she will be of help here. You'll need to have in hand your new homeowner's insurance policy, showing that you have, indeed, insured the house, and a cashiers check.

The settlement sheet is a document which lists all of the closing costs and the particulars of your loan. If you'd like a preview of a settlement sheet, the Department of Housing and Urban Development (HUD) has conveniently put one online. You'll find it by clicking here (and you'll need the Adobe Acrobat reader, available free online, to view it.)

The Passing of the Baton

The seller is advised not to cancel homeowner's insurance until recordation has occurred, which is to say, the sale of the house has officially been recorded at city hall. This usually takes place within 24 hours of the sale.

The buyer, meanwhile, is advised that he should have his homeowners policy activated immediately (but you already arranged this, didn't you?) and he "takes possession" upon the completion of closing. What does "take possession" mean? It means the house is yours. It means that, after you've signed all these documents, the seller (or someone from the seller's team) is going to place the keys to the house in your hands. Yippee! Congratulations!

At this point, the seller (or builder, if it's a new house) gives you whatever package of information he may have on equipment at the house. This includes things like the instruction booklet for the washing machine; information on how that timer-light above the front door works; how you re-code the automatic garage door opener; how-to manuals for the refrigerator and the food disposal. You get the idea -- everything you need to work and service and understand all of the major appliances of the house.

What can go wrong?

The good news is that an overwhelming majority of closings occur without a problem.

Things can, however, go wrong. Sometimes the loan that was supposedly approved wasn't, because the lender comes in with terms with which the purchaser cannot comply. Buyers have been known to show up at closing anyway, in the hope that the seller will reduce the price in order to close. That may even happen: The seller may have purchased another home and will be willing to take less money in order for the deal to go through. On the other hand, it may well not.

Another possible snafu is that the title information comes back and reveals that the house has a lien against it that no one knew about. Real estate agents have stories of "husbands" and "wives" who show up, who aren't in fact married (the true spouse isn't there because, say, they're in the middle of a divorce, and one person is trying to sell the house out from under the other.) Most states now require photo identification at the time of settlement from all parties involved. A husband and wife may show up having been married for two days, and the credit check on the woman may show that she has eight aliases and is wanted in Montana for sheep rustling. In this case, the loan will have been turned down.

These scenarios, while they do exist, are not likely.

However, be sure to take the responsibility to examine the paperwork and examine it well. Ask whomever is handling the closing to explain it to you. You should be as prepared as possible for this transaction. Now is not the time to be shy or afraid of "looking stupid" by asking a question.

If all goes well, then you are now the proud owner of a home. Congratulations! Celebrate!