Settlement Unsettling to First-Time Home Buyers

Closing on a home-sale contract is a suspense-filled drama, especially if you're a first-time homebuyer. First, you get stage fright as you drive white- knuckled to the attorney's office, wondering what might go wrong at the last minute. Then you get writer's cramp as you sign bunches of confusing documents. Butterflies really start to swarm in your stomach for the tension-filled climax--final payment. The number is so big you've run out of room on the check.

Actually, settlement day is not so nerve-wracking if you arm yourself with the right information beforehand. You can stride confidently to the closing table, knowing that you've done your homework, and that your settlement attorney and lender are on your side.

Your first step is to find a qualified settlement attorney or company to represent you. If you use an attorney, make sure he or she handles residential real estate closings on a frequent basis. Get referrals from your personal or business lawyer, from your real estate agent, or friends or associates. Interview the recommended person or company and ask them how much experience they have.

Your next step is to familiarize yourself with that long-winded document, the HUD-1 Disclosure/Settlement Form. Take your time going over the numbers. You should have already received an estimate of closing costs, including settlement fee, title search, title insurance, document preparation, etc. If you're smart, you've already discussed those figures with your loan officer and settlement attorney. Compare that estimate carefully with the final numbers on the HUD-1 form for any discrepancies or higher costs. The numbers could be lower or higher for legitimate reasons but it's in your interest to double-check and ask questions at settlement. Prior to settlement day, make sure you've gone over the loan agreement, including points, down payment and other fees due on the loan at closing.

Take a good look at the sales contract, too, and familiarize yourself with the terms before you go to closing. Is the seller paying any of the loan points or settlement costs? Are all items included that are supposed to convey with the home, such as appliances, window treatments or chandeliers? Right before closing, you'll have the opportunity for a "walk-through" of the home to check on those items, and to make sure that everything is in good working order and that any required repairs have been made. Immediately notify your settlement agent of any discrepancies.

For settlement day, you'll need to bring your checkbook, plus a certified check or cashier's check for the balance of the down payment and estimated closing costs, your driver's license, and a copy of your home insurance policy.

Sources used to create this article include writer Michele Lerner and The Washington Times newspaper.