Q: In the world of real estate, exactly what is a closing?
A: Sitting at a table in the presence of a real estate attorney and exchanging ownership of the house for a sum of money. It often is called settlement or the moment of sale.

Q: What happens at the closing?
A: Typically, a closing is held in the office of an attorney. Most often, that attorney specializes in real estate. Because the attorney is representing the lender, he will make sure the lender is protected.

Q: But how does it help me?
A: One thing you should be concerned about at closing is obtaining undisputed ownership of the property from the seller. Because your lender is accepting an interest in the property from you as collateral for the loan, the lender’s interest in the property is only as good as your interest in the property. Thus the attorney will work to make sure there are no ownership challenges or disputes. This process is called title examination. Even though the attorney is representing the lender, you are protected by his efforts.

Q: How do I know I have full ownership?
A: By asking the attorney to review the chain of title with you before the closing. You also can buy optional owners title insurance. This is a one-time premium paid to a title insurance company, and it protects you and your heirs against challenges to your ownership. Purchasers are not required to purchase title insurance, but I strongly recommend it. The cost is usually about $2 per $1,000 of the purchase price.

Q: What else happens at the closing?
A: The attorney will review the sales agreement, making sure all contingencies have been satisfied. For example, if the agreement was contingent on your builder completing all construction work, the attorney will likely ask for a copy of the certificate of occupancy from the county building inspector.

Q: If all the contingencies are satisfied, how do I buy the house?
A: You pay for it with a combination of three sources of funds. First, you will get credit for the amount you paid as earnest money, which is typically about $1,000. Next, if any down payment is required, you will be asked to produce this in certified funds, made payable to yourself and endorsed to the attorney. Finally, you will be asked to sign the loan documents, and then you will be given credit for the net loan amount. The total of these should equal the purchase price of the house, plus any other expenses you are responsible for paying.

Q: How will I know what amount to bring to the closing table?
A: At the time of your loan application, you will receive a good faith estimate of all expenses related to your loan and who will be responsible for paying them. Next, your loan officer and real estate agent should provide you with an accurate estimate at least two weeks before the closing. Finally, the closing attorney should provide you with a final HUD-1 settlement statement along with a sample of documents you will be signing at least one day before the settlement. Any variation between the these estimates requires an explanation.

Q: What documents will I be asked to sign?
A: You will likely be asked to sign a clean copy of your loan application. This copy is typed and contains no errors. Your signature means you are certifying that the information on the application is correct. In regard to the loan itself, you will sign two important documents:
1. The note is simply the IOU in which you personally promise to pay the money back to the lender under the agreed upon terms. If you don’t, you agree that you will be personally responsible for the debt.
2. The security deed is the document under which you transfer a security interest in the property over to the lender to hold until the debt is paid in full. In Georgia, we use a security deed because it grants the lender the power of nonjudicial foreclosure. This gives the lender the right to take the property away from you if you fail to pay as agreed.

Many other documents and certifications will be signed at the closing, but none is as important as those mentioned above.

Q: What if I choose not to sign any of these documents?
A: The lender will not allow the closing to proceed.

Q: Can I read these documents before I agree to sign them?
A: Yes, but don’t plan on reading them while everyone is at the closing table. It could take hours. Instead, ask the closing attorney for a sample package of documents about a week before the closing.