Financial Tools
What is a Closing

A closing? Scary, right? Wrong! Typically you will be working with an escrow officer who will coordinate the details for you. The escrow officer will begin with information in your contract and will have a search done on that property. It will cover things such as outstanding mortgages, liens, restrictions and easements as well as the rightful owner of the property. The title commitment or preliminary report will also show what kind of documents will be needed for the title to pass to the buyer properly.

The escrow officer will arrange to get the necessary information needed to prepare the closing papers. If a new mortgage is being obtained, the escrow officer will work closely with the lender to meet the lender's requirements as well as the requirements to assure proper transfer of title to the buyer. In addition, things such as homeowner's associations, condominium associations, termite inspections, surveys and homeowner's insurance policies will be considered.

The buyer and seller will both be advised of things they need to do during the time of this processing. If the seller needs to make his home available for an appraisal or an inspection, he will be required to respond. The buyer will need to be sure to get everything to the mortgage company that they request, or there could be delays.

Prior to closing, the buyer will be advised that a Hawaii drawn cashier's check, or wired funds in a certain amount will be needed to pay off closing costs associated with the transfer of ownership. The seller will be advised of the amount of his proceeds from the sale of his property.

Both the buyer and seller usually have closing costs. For the buyer, this means his down payment. The financed portion or mortgage and closing costs comprise the total amount he will pay to gain title to the property. The closing statement usually outlines the total costs associated with the transfer of ownership. However, if the buyer and seller have negotiated sale of other property, like pool furniture, it also needs to be paid at closing. In any event, buyers must bring certified funds to cover closing costs since a personal check is not acceptable. The closing itself usually occurs when the escrow officer, buyer with his Realtor®, and seller with his Realtor® meet at the escrow officer's office. The escrow officer will have all the closing documents necessary for signing. Typically, the closing statement will be explained in detail, and the escrow officer will then go on to the rest of the closing papers.

When all papers at closing have been signed and the buyer has delivered his cashier's check to the closing agent, the escrow officer will then process the necessary documents and send the deed, mortgage and other papers to the recording office. Once they are returned from recording, the title policies to the new owner and lender will be issued. Typically, the new owner should receive his recorded deed and policy 3 to 4 weeks after the closing. Whether a transaction is a cash deal or the buyer assumes the seller's mortgage, the process is the same. Ask your escrow officer or Realtor® for a copy of the title commitment or preliminary report, the closing statement or any unanswered questions you have.