Question: What costs are involved in a real estate transaction?

Answer:

- Typical Home Buyer Expenses

Question. What do I need to bring to closing?

Answer:

Everyone will need to bring some current (not expired) government-issued identification with your photo on it, such as a driver's license, passport, or military ID.

If you are the buyer, the money you bring to closing needs to be in the form of "certified" funds, such as an official bank check, certified check, cashiers check, or money order (or wire transfer, or even cash), made payable to the trust account of the closing attorney.

Sellers often think they need to bring their original deed to closing, but this is not really necessary in North Carolina. The recorded copy of the deed in the County Register of Deeds office, which the attorney examines during the title search before closing, is more important than the actual original deed.

The above guidelines are only general; in your specific situation the closing attorney might modify or add to them. Check with your agent or the attorney a few days before closing to confirm you have everything you need.

Question: Should we consider buying a home in foreclosure?

Answer:

Purchasing a home in foreclosure often appears to be a good value, but factors outside of the price need to be considered:

Question: What is a lease option, how do lease options work and what are the benefits?

Answer:

A lease option is an arrangement with you and a seller to exercise the option to buy a house after you have rented it for a specific period. A portion of your rent would applied toward the purchase if the option is exercised. This is referred to as rent credit, which most institutional lenders will accept as part of the down payment if rental payments exceed the market rent and if a valid lease-purchase agreement is in effect, a copy of which must be attached to the loan application.

If you are a seller, lease options can give you several advantages, especially in a slow market. These include a monthly rent higher than market rent, top-market value for the property and tax-free use of the option consideration until the option expires or is exercised. Also, the renter is more likely to treat the property like an owner, tax-free use of option consideration until the option expires or is exercised.

Read and understand any lease-option arrangement carefully for details on transferring the option and other important concerns.

Question: What good is title insurance?

Answer:

A title search and the issuance of title insurance means the ownership of the property can be cleanly conveyed to the new owners. During the search, the history of the property is researched verifying that all previous claims or liens have been satisfied, allowing a clear title to be issued. If any claim is overlooked, the title insurance protects the owner from the claim. Remember that if it’s not in writing on a real estate deal, it’s not enforceable.

Lender’s Title Insurance insures the priority and validity of the mortgage loan and is required by banks and mortgage companies.

Owner’s Title Insurance protects your investment by:

Question: What risks are covered with title insurance?

Answer:

Question: The house I am selling is in my name only. Does my spouse have to attend the closing?

Answer:

Yes, your spouse must also sign the deed. This is because spouses have potential property rights in any real property their spouse owns, and they must release those rights if the property is conveyed. This is true even if you, the owning spouse, got the property before you were married, or inherited the property from your family, or you have a prenuptual agreement

Question: I am married, but my house is in my name only, and my spouse will not be a co-borrower on the mortgage. Does my spouse have to come to the closing?

Answer:

Yes, with one exception (see below). This situation is really the same as the one in the question just above. Even if your spouse does not co-own the property with you, he or she must also sign the mortgage (which is almost always called a "deed of trust" in North Carolina). When you get a mortgage loan, you convey to your lender a property interest in your house, and your spouse's potential property rights need to also be subject to the mortgage. The rule is, "One to buy, and two to sell."

There is one possible exception to this, that applies only to closings where you are purchasing the property in your name only and simultaneously getting a first mortgage loan for said purchase. If the proceeds for the first mortgage loan are being used for purchase money and closing costs only, it is probably not necessary for your spouse to sign the deed of trust. You will need to discuss this with your closing attorney, to see if the exception applies to you. This exception does not apply to second mortgages to finance part of the purchase price, or to mortgage loans you get later; such as a refinance first mortgage loan, or a home equity line of credit.

Of course, if you are buying real property in your name only, for cash, that is, you are not getting a mortgage loan, your spouse is not needed at the closing.

Question: My spouse has my Power of Attorney. Can she sign for me at the closing so I won't have to attend?

Answer:

Possibly. You need to inform the closing attorney that you want to do this, because he or she will need to see the Power of Attorney beforehand to see if it is valid for your real estate closing. Also, the attorney will need time to prepare additional documents in this situation, and the original Power of Attorney will have to be recorded. I often see Powers of Attorney that the persons filled out on a form they got at an office supply store; I HAVE NEVER SEEN such a "homemade" Power of Attorney that was valid for a real estate closing.

(IMPORTANT NOTE, added 1-27-2000: Thanks to a recent change in North Carolina Law, eliminating the requirement of a "seal," many such "homemade" Powers of Attorney, prepared from software, etc., might now be valid for a real estate closing, but it is still critical that they be reviewed by the attorney before closing.)

Please note also that a Power of Attorney, though perfectly valid, might have been written to be used only for an earlier, specific closing or transaction. Such Powers of Attorney, containing a limitation to specific property, a specific mortgage loan or lender, or an expiration date, are very common. In this case you will need to sign a new Power of Attorney.

If you are a borrower on the mortgage, your lender also has to approve your non-attendance at the closing through the Power of Attorney; many lenders will require you to attend anyway (if you want the loan). Most lenders that allow Powers of Attorney, require that they be specific for the transaction, as described above.

Question: When can I, the seller, get my money from the closing?

Answer:

In North Carolina, the closing attorney is not allowed, under the current rules of the North Carolina State Bar, to disburse any funds, including the seller's proceeds and/or the realtor's commission, until the deed and deed of trust are recorded in the County Register of Deeds office. This means that you will not get your proceeds check at the closing table. If you recall a closing where you got your check during the closing, then it took place in another state, or the attorney was operating at a time when the applicable State Bar rules were different. The attorney's office will need at least one hour after closing to deposit the purchase funds, update their title search (to make sure no liens or adverse conveyances have been recorded just before or during the closing), and to record the documents.

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Question: I am expecting proceeds after closing. May I have those proceeds wired to my bank?

Answer:

Yes. Our fee to wire the funds to your account is $25 and can be deducted from your proceeds. You will need to provide our office with your wiring instructions prior to or at closing.

Question: When will I know how much money I'll need to bring to closing?

Answer:

Typically 24 hours or so prior to closing we will provide the HUD-1 Settlement statement to you for your review. The Settlement statement will show on line 303 how much you need to bring to closing (in certified funds). In the event that number changes at closing due to an oversight by one of the parties or some last minute negotiation, a personal check can be made at closing for any shortage. Please note that it is our policy to generate a HUD-1 within 24 hours of receiving the closing package from your lender. In the event we get your package early, you will get your final numbers early.

Question: I want to terminate my contract, what should I do?

Answer:

You should contact your agent and let them know that you would like to terminate the contract. If there is a dispute with regard to the release of the earnest money or who is entitled to it, the agent by law may not disburse the money to anyone but the clerk of court, and the parties will be forced to plead their case, so to speak, in front of a judge or magistrate, who will then decide how the earnest money is to be distributed. A termination of contract should be executed so that the buyer and seller can move on. In the event the parties are able to negotiate the terms of the release of the earnest money, a termination of contract setting forth those terms should be executed by the parties and the disbursement should be made by the agent according to those terms.

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Question: I am selling my property and your office is handling the drafting of the closing documents on my behalf. May I sign the document prior t o the scheduled closing date?

Answer:

Yes. The documents that need to be signed can be emailed to you prior to closing. Once you execute those documents (in front of a notary), you may return them to our office prior to closing. In the event you want to come in to our office and sign the documents prior to closing, there will be a $25 early signing accomodation fee. This is charged because of the time associated with reviewing and explaining the documents at a time other than the scheduled closing time.

Question: Why is my payoff higher that my newest statement I received from my lender?

Answer:

Mortgage payments are made in arrears, meaning that the month in which you pay your mortgage actually covers the interest from the prior month ( i.e. October payment covers September’s interest. Because you will not be making the payment for the month following the closing (i.e. October closing, you will not make November payment), the interest from the 1st of the month through the closing date must be added to the principal balance to calculate the “payoff”. Also, most mortgage companies charge between $10-75 to provide the payoff information, which further increases the payoff amount.

Question: Should I make my next payment to my mortgage company?

Answer:

You should discuss this with your lender, broker or agent, but generally if, as a result of the sale or refinance, your old loan will be paid off by the 15th of the month, then you will not need to make that payment for that month. This is because typically no late charges accrue until after the 15th.

Question When will my documents be recorded?

Answer:

Typically any purchase closing completed before 3:00pm will be recorded the same day, subject to lender approval. Because the lender is typically the final voice as to whether our office has the authority to record, this general rule is subject to change for each closing. An example would be if the lender has yet to send us a wire for the loan proceeds. In that event, we cannot record until we receive the money. In the event the seller will not provide keys to the home until we record the deed of public record, please notify Sonia in our office so that the buyer can be advised to alert the lender to the issue.

On a refinance, the Deed of trust will be recorded after the expiration of your 3 day reccision period.

Question: What is a 1031 exchange?