Anatomy of A Florida Real Estate Closing
A real estate "closing" is when and where the keys and money are exchanged and the transaction is completed. The mortgage lender sends their loan documents to the closing agent along with their closing instructions, which set forth the conditions to close the loan.
The closing agent (after verifying the Closing Disclosure has been provided to the borrower 3 days before the closing - see below) gathers all of the necessary documentation from both the buyer and the seller, including a Deed, Affidavits and a Bill of Sale. The closing agent will ensure that all necessary papers are signed, witnessed, notarized and recorded and that the funds are disbursed to the seller, real estate agents, insurance companies and, in some instances, the lender.
In general, the buyer is required to bring to the closing a certified bank check or by wire transfer. The exact dollar amount necessary to close the transaction will be provided to the buyer 3 days before the closing (See the Closing Disclosure).
At the closing, the closing agent will explain each and every charge before any money is transferred and the transaction closes. Once the transaction closes, the closing agent will then send the Deed to recording in the Public records for the county in which the property is located. At closing, the parties sometimes execute a tax reproration agreement to cover the contingency that the actual real estate taxes are greater or less than the amount collected at the closing.
The Settlement Statement (Commonly Known As A "Closing Statement" or "HUD-1") Is No Longer Being Used For Residential Purchase Transactions Involving A Federally Insured Mortgage
The HUD and two other forms (the Truth in Lending Disclosure Statement (TIL) and the Good Faith Estimate (GFE)) have been replaced with 2 new forms. This change was mandated by the Consumer Financial Protection Bureau as part of the Dodd-Frank Act. According to the "Guide to the Loan Estimate and Closing Disclosure Forms" the new forms are known as:
1.The Loan Estimate - The Loan Estimate is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying. The Loan Estimate must be provided to consumers no later than three business days after they submit a loan application.
2. The Closing Disclosure - This form is designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction. The Closing Disclosure must be provided to consumers three business days before they close on the loan.The forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan.
More From The Guide:
The forms also provide more information to help consumers decide whether they can afford the loan and to compare the cost of different loan offers, including the cost of the loans over time.
The Loan Estimate and Closing Disclosure must be used for most closed-end consumer mortgages. Home equity lines of credit, reverse mortgages, or mortgages secured by a mobile home or by a dwelling that is not attached to real property (i.e., land) must continue to use current disclosure forms required by TILA and RESPA separately. The TILA-RESPA rule does not apply to loans made by persons who are not considered “creditors” because they make five or fewer mortgages as year.
Generally, the Loan Estimate and Closing Disclosure require the disclosure of categories of information that will vary due to the type of loan, the payment schedule of the loan, the fees charged, the terms of the transaction, and State law provisions. The extent of these variations cannot be shown on a single, static example. The Guide includes most of the requirements concerning completing the Loan Estimate and Closing Disclosure. However, the Guide does not illustrate all of the permutations of the information required or omitted from the Loan Estimate or Closing Disclosure for any particular transaction. Only the TILA-RESPA rule and its official interpretations can provide complete and definitive information regarding its requirements.
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