The day of the sale – what happens?
When you are selling a home, the closing day becomes the most important part of the entire selling process. While you are giving away your property, you are also getting paid in full and settling any debts or mortgages. For sellers that are already in the process of acquiring a new home, this day is especially important, and it has to go flawlessly and without hiccups. This is why our article is here to get you through the day successfully.
What does closing mean?
When we speak about closing, we refer to the part of a buying/selling process when all lose ends are tied up. This means that money and documents and ownership rights are transferred between all parties involved in the process.
If you still have ongoing mortgages on your home, the closing is the time when these debts are settled. The remaining proceeds are then yours. The buyer transfers funds to you, while in exchange, you transfer the ownership rights to the home (and here we refer to every paper-work and document involved). Lastly, all parties involved on your side of the house-selling process are also paid off.
Usually, all contingencies included in the contract are completed until the closing day, but exceptions might arise, where a contract binds you to certain obligations even after the closing. A good example would be work you still have to do on the house (repairs, modifications) even after the rights have been transferred to the new owner, based on previously negotiated terms.
Closing can often become a complicated process, with attorneys, your own loan agencies, the buyer’s loan managers, real estate agents, and other parties being involved. To ensure that the process goes smoothly, sellers usually hire the services of an ...
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... to remind you that if you do choose to stay on as a tenant, you will be liable for any and all damages the house suffers during your extended stay.
We advise avoiding such complications if you can. It’s best to be ready to move out by closing day.
Lastly, once the funds for the transaction have been transferred to your mortgage lender (if there was a mortgage in the first place, of course), the lender will issue a release of mortgage that will be delivered to you. In some cases, this release is forwarded directly to your escrow or submitted to the county deed recorder. Still, it’s best to carefully observe this process ensure that the release is recorded. Once you obtain the release, hold on to it, together with all the documents and papers associated with the closing. Having the documents at hand might come in handy when your yearly tax evaluation takes place.
The State of Missouri requires professionals to obtain a license before providing services to the public, in many careers. Misconceptions hold that issuance of licenses is just something that is needed in order to charge money for services. Licenses are issued however, because the public puts their trust in professionals who are more knowledgeable than they are. Many people today want to avoid the hassles and risks associated with the transfer of land, so they put their trust in licensed real estate professionals. The Missouri Broker Disclosure Form (MBDF) is a document used by the Missouri State Real Estate Commission that attempts to provide the public, knowledgeable information, about agency relationships (the fiduciary relationship between buyers/sellers and agents). It also holds real estate agents and brokers somewhat accountable to the public in representing them in their best interest; all real estate agents are required to present and explain this form to buyers and sellers. It seems in today’s society that greed, corruption, and self-interest has spread like an infectious disease and we live in a world where it is risky to put our trust in other people. The government tries to respond to that corruption by putting into place more regulations and laws to keep people honest. In summary, the Missouri Broker Disclosure Form is a document designed to help the public make an informed choice about the agency type, of the people that they are putting trust in, and the fiduciary commitments due to them.
Collateral for the defaulted loan. Distressed real estate involves making a distressed purchase. According to Financial Crisis (2011), “[A] distressed purchase is whereby the property owners are usually in a foreclosure/short sale situation.” Foreclosure applies to a residential real estate loan in which a bank or creditor repossesses a home because of nonpayment. The institution will legally possess the right to resell the property as collateral for the defaulted loan. The selling price can be sold at a price equal to or greater than the original loan. The reason distressed properties can be bought at a lower price is the institution has already received a series of payments toward the original home loan. In many situations the lender can sell the house for a lower cost than the normal market value, leaving the buyer the opportunity to make a purchase at a lower selling price than market value and reselling the property at a profit (Demand Media, 2011).
Those involved in the mortgage lending process have some duty to the borrower. They are expected to perform their specific duties in an ethical manner and have some form of direct or indirect contact with the client. Banks (Prime Market): Banks are lenders who generally handle all facets of the lending process through their own institution. They function differently from brokers in that they usually only service those clients with good credit ratings/scores of 700 or more. Mortgage Brokers (Sub-prime Market): According to HUD, the Department of Housing and Urban Development, mortgage brokers are involved in about sixty percent of all mortgage loan transactions. Brokers try to find the best loan for their clients by shopping their loan applications around to lenders who are willing to accept the clients credit package. Brokers generally service clients, known as B-C-D credit clients, with ratings/scores of 650 and below. In some instances, a major problem for borrowers is that a broker may work in the best interest of the lender as well. Furthermore, in some states they can act as brokers and lenders. Brokers can be considered dual agents. Brokers (1) originate loans using “table funding” provided by a pre-arranged buyer of the loan (2) originate loans using a line of credit from a bank/financial institution (3) originate loans using their own funds (4) bring the borrower and lender together in a transaction that they do not originate. Real Estate Agents: In most cases, Realtors refer borrowers to a lender or mortgage broker. They are paid a percentage of the sales price of a home. The seller pays a Realtors fee. Closing Agent: Closing agents perform property title searches and prepare documents for the actual closing of the sale of a home. Most closing ...
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