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Some home buyers could be considered “hands on;” they want to know everything that is going on in regards to the paperwork, the inspections, the title research, and the closing costs. Other home buyers could be considered “oblivious” as they take no interest or responsibility in the closing matters and just would like to move into their new home. Perhaps a balance between both extremes is best.

Closing on a Home and the Details Involved

While you need not overburden yourself with professional issues that others are trained to handle, you also do not want to be completely ignorant about what is happening during closing, right? So, a little time spent on understanding what happens during the closing process would be time well-invested; and a little money spent paying professionals to help you with it all could also be money well-spent.

Of course, some things you will want to either do yourself, or at least be a part of, such as the inspection of the home. If you can be present during the inspection, you will learn quite a bit about the construction of the home, the materials used, the heating and cooling systems installed, and the wiring of the home. If the inspector makes suggestions that some things should be fixed or repaired, take their advice.

You can either ask the seller to fix the problems before you move in or fix them on your own once the home becomes yours after closing. If you choose to do it yourself, be sure to deduct the cost of the repairs from the selling price of the home. Hopefully, such issues can be worked out amicably between the parties involved, although sometimes they cannot and the “deal” becomes a “no deal” situation. For this very reason, you must have some contingencies written into your contract that allow you to walk away from the contract without penalty if you and the seller are at odds.

If All Goes Well You’re Ready To Close

Assuming all goes well, and the home is in a condition that is acceptable to you, you will move forward. Look to receive a HUD Settlement Statement a couple of days before the actual closing date. You can look over it carefully and follow the financial process line-by-line. Included in the lines will be your actual closing costs and fees. Hopefully, nothing substantial within the statement will be a surprise to you, and instead you will just look over it, agree with it, and move forward.

You should find, within the settlement agreement, things like title insurance expense–which protects both you and your lender from claims made regarding the ownership of the title, and it should only be about less than one percent of the home’s total price.

You might also find mention of an escrow account in your settlement papers—which keeps you current with property tax payments that will come due; this amount could be as much as two months’ worth of expected taxes. The settlement agreement includes pages and pages of formalities, legal conclusions, and financial explanations; look over it closely, but also trust an attorney or a whomever you choose as a settlement agent to do an honest day’s work for you.

Just Because You Closed Doesn’t Mean Your Done!

Even after you close, you would be surprised at what still has to happen. For example, your settlement agent may need to forward a payment to any prior lender; he/she will have to pay the professionals who helped you during the closing process; he/she will pay any net profit to the seller. Thank goodness you have a professional settlement agent who knows what must be done—from start to finish. You won’t have to worry about any of these final steps, but it is kind of reassuring to at least understand the jargon and the process.

This article was provided by Arlington Virginia Realtor Aaron Seekford who specializes in helping buyings find Arlington MLS listings. You can learn more about Arlington by checking out Aaron’s Arlington Virginia neighborhoods page with access to more listings in the area.

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Assuming – like most people – you don’t have enough cash to purchase your next home, you’ll be required to shell out a few thousand on closing costs for services that are designed primarily to protect your lender against your potential default.

Some of these safeguards are initiated by the lenders, but others are required by government regulation.

Yes, I’m sure you’ll be glad to hear that the cost of keeping those big banks in line is being passed on to those of us who can’t afford to pay cash for our homes. But I digress.

The Value of an Appraisal

When the bank runs a credit check on you and requires you to buy homeowner’s insurance and title insurance, you can be sure they are protecting their own interests more than yours. But there is one closing cost that I view as particularly valuable for a buyer, and that is the appraisal.

I even advise my cash buyers to invest in an appraisal, although, statistically, most of them don’t. An appraisal is nothing more than a professionally generated opinion of value, and most of the cash buyers I’ve known either don’t care, or they just don’t like to be second-guessed.

Appraisal’s Protect Both Buyer and Bank

But from the less wealthy buyer’s point of view, the appraisal is a safeguard against paying too much. If your Purchase and Sale Agreement is worded properly, you shouldn’t have to pay more for a house than its appraised value, so a low appraisal will usually re-open negotiations with the seller, and may give you a chance to take a slice off the price.

In addition, most mortgage programs cap the mortgage at a certain percentage of the appraised value. If you want to increase your down-payment, you can still buy a house that appraises low, but not everyone has that luxury, so the usual next step is to go back to the seller and ask for a price reduction.

There may also be some secondary benefits to the appraisal process, although they mostly duplicate the findings of other aspects of your research.

Depending on your loan program, for instance, there may be certain construction standards or safety requirements that the appraiser is required to look for. These can include things like peeling paint or missing stair rails.

While these are also things that should be picked up in a building inspection, they carry greater weight if they are included in an appraisal report. If the lender turns down the loan because the appraiser reported a rotten porch stairway, you have more leverage to make the seller fix it than if it had just been a footnote in a building inspection.

To some extent, also, the appraiser should check the municipal records and flag anything that looks non-conforming, for instance overt code violations or a neighbor’s encroachment. But these are not things you want to rely on the appraiser to discover. Your buyer’s agent should be doing a more thorough search of the municipal records, advising you to bring in other professionals as needed, for instance if there are boundary line issues that should be resolved by a surveyor.

Article provided by Linda Wise a Merritt Island FL real estate agent specializing in Indian Harbour Beach Real Estate. If you’re interested in finding a sunny beach in Southern, FL to live you can find the perfect place to live by searching Malabar Florida Real Estate on Linda’s Tropical Realty site.

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