All smart Buyers want to be prepared for their real estate closing. While every purchase transaction is different, most purchasers will need roughly the same things at their closing. This list is by no means complete and can vary from deal to deal so Buyers would be wise to check with their real estate closing attorney first! The items may be different if the transaction is a cash deal or a financed deal, as many lenders will add additional items to the list of closing requirements identified below, most buyers will need the following:
Buyer, Co-Borrowers, and Spouses
The buyer usually needs to be present at the closing to sign the closing paperwork. The primary work of the buyer at the closing is to sign loan and mortgage documents, title company documents, and the ALTA settlement statement. Any buyer that is going to be a borrower or co-borrower on the loan needs to be at the closing in person to sign documents. In addition, any spouse or partner in a civil union has what are known as homestead rights in any real estate intended to be a primary residence. Most lenders will require that a spouse or civil partner attend a closing to “waive” the homestead right with regard to the mortgage document and a few other federally required lender documents. It makes sense for a buyers to check with their lender in advance of closing to make sure they know just who must show up.
Despite the fact that a purchase closing is probably one of the biggest transactions a buyer can participate in during their lifetime, some buyers just can’t make it to the closing table because of work, travel, or other hardships. If this is the case, and if the buyer’s lender allows and provision is made well in advance of closing, sometimes a buyer can sign a power of attorney and have a different person attend closing to sign for the borrower. Lenders do not generally draft powers of attorney, so the Buyer usually must ask the real estate closing attorney to help with the document. The Buyer’s lender usually has to clear the power through their underwriting process before a power of attorney may be used, so this is not something that can be set up at the spur of the moment.
Funds / Money
Most of the time, a Buyer needs to bring in funds to close. The money for closing needs to be at the title company at the time of the closing (and if wired, preferably before!). The Illinois Good Funds law determines what for the money for closing must be in. Typically, the closing disclosure delivered to the Buyer by the lender three days before closing will be a decent estimate (but often not the final amount) of funds needed to close. The actual amount necessary is usually obtained by the real estate closing attorney and communicated to the Buyer on the day before closing from the title company. If the funds needed to close are in excess of $50,000, then those funds need to be wired. If the funds are under $50,000, then a cashier’s or certified check is necessary. There are other exceptions for attorney escrow checks or checks from other title companies. Don’t rely upon those without checking them out with the attorney closing the deal first! If there are small changes at the closing table, a title company can usually take a small amount of money in the form of a personal check, so it is a good idea to bring a checkbook as well.
Buyers should also know that if they are going to have a cashier’s / certified check drawn or want to wire money, they need to have the funds available. Sometimes, funds are in a money market account and need to be sold at the end of the day, requiring some additional time for the funds to clear and be available. Similarly, some banks and financial institutions don’t actually wire but instead use an ACH transfer which can take longer than a wire. To have the funds needed at the table (and to stay out of contract default), a smart Buyer will inquire with their bank or financial institution in advance to avoid delays caused by misunderstanding the procedures of getting the money to the closing table.
Every Buyer signing documents will need a valid, non-expired, government-issued picture ID card. Get that? Government issued means something from a state or country like a driver’s license, state ID, or passport. Valid and non-expired means that if it expired a few weeks ago, it won’t work! Also, it needs to have a picture on it. What will not work? A speeding ticket. Many police officers will tell drivers that “a ticket is just like your license”. That’s not true when it comes to a closing. Buyers who get a speeding ticket before a closing and have their license taken away need to be prepared to get a state ID card!
A lender and/or title company will usually need your insurance paperwork. That usually consists of the declaration of insurance page (including a mortgagee clause listing the lender’s name and address as directed by the lender) and a paid receipt or an invoice (if the insurance is going to be paid for at the closing). Buyers should not assume “oh, my lender has that”. I’ve been at plenty of closings where the lender was supposed to have the insurance paperwork but did not. Better safe than sorry. Buyers should be aware of whether or not they are paying for their insurance ahead of time or at the closing table. In either case, the lender should be aware of this well in advance.
And then, there is the rest! First, the Buyer’s lender might provide a list of other paperwork or documentation (bank statements, letters of explanation, etc.) that are necessary to bring along to the closing. There may also be final walk-through issues that come up at the closing table. it is always a good idea for the Buyers to bring along photos of the conditions in case those might be needed to prove a condition at the subject premises. The Buyer should also have contact information for their loan officer, loan processor, movers, insurance agent, condominium association, or any other party related to the transaction just in case there is a need to contact one of them.
Real estate purchase closings are not easy. There is no “one size fits all” solution. An experienced real estate closing attorney can assist Buyers in Chicagoland to navigate the complexities and uncertainties of a closing in Illinois. Feel free to contact us to see if we are a match to assist with your transaction.