What are my responsibilities before closing, and what are the seller's responsibilities?

Once you've signed a contract to buy or sell a house, the preparation for settlement begins. Settlement, or closing escrow, is the process of transferring the title (ownership) of the home from seller to buyer.

Often, the real estate agents involved in the sale help take care of these arrangements. But the buyer and seller are ultimately responsible for attending to these details. Here are the basics:

Buyer's Responsibilities

The buyer must first secure the financing to buy the house. Usually this means taking out a mortgage loan. Most lenders require a complete financial picture, including income and expenses, and a credit check. In addition, most lenders want an up-to-date appraisal of the home, a survey of the property and, often, some inspections (for termites, radon gas, etc.). Some lenders specify which service providers they want the borrower to use. Once all the paperwork is in, the borrower should keep in touch with the lender until receiving a loan commitment.

The buyer needs to purchase a hazard insurance policy in advance for the new home. The buyer is also required to purchase title insurance policy - usually at settlement - to protect the lender. If the buyer wishes to bring an attorney to settlement, arrangements should be made 30 to 60 days in advance.

A few days before settlement, the buyer should receive a Good Faith Estimate of settlement costs. In addition to the loan commitment letter, the buyer must bring a certified or cashier's check for the down payment and any other costs due at settlement. Also bring your checkbook in case there are any miscellaneous costs. These costs include mortgage interest from the closing date to the first payment due, escrow for property taxes and insurance, and various taxes and recording fees.

Seller's Responsibilities

The seller usually designates the settlement agent, usually 30 to 60 days before closing. The seller also makes arrangements with designated services for inspections and appraisals and provides needed paperwork such as a housing plat, previous title insurance information and any prior inspections.

The seller also needs to check with their lender to get up-to-date figures for the payoff of the mortgage, and to learn if any rebates are due for pre-paid taxes or insurance.

Mutual Responsibilities:

Both the buyer and seller need to give the settlement agent all pertinent information requested. And, since many long and detailed forms are usually signed at settlement, both might consider requesting copies of the basic settlement forms several days in advance to review them. The focus at the settlement table is on checking the exact figures to be sure they are accurate.

If either the buyers or sellers cannot come to closing, they should notify the settlement agent in advance so a Power of Attorney can be prepared.

Once all the papers are signed and money is paid, the seller hands the keys over to the buyer and the sale is complete.