A closing involves signing documents with unfamiliar or confusing terms. Here are some quick definitions:
Certificate of occupancy: This is used when buyers are moving into a newly constructed condo and states that the building is safe to occupy. This is given by the local government after it conducts an inspection.
Deed: The legal document officially transfers ownership from the seller to the buyer. The seller must sign this, and in many states the buyer does, too. It will be stored at the county recorder’s office and made public so that anyone can discover that the buyer is the legal owner of the condo.
Deed of trust: A document buyers sign stating that they agree to use their condo as collateral for their loan.
Estoppel certificate: The document from the condo community’s homeowners association details whether there are any outstanding HOA monthly dues or other obligations on the condo unit. This prevents future disputes and makes the sale more transparent. It also states what the current monthly HOA fees and other expenses are for the buyer.
Initial escrow statement: The document states what payments the lender will make during the first year of the loan, like taxes and insurance. Buyers have the option of paying these, but many prefer monthly deductions that are rolled into the monthly mortgage payment and sent by the lender.
Loan application: This is the application buyers submitted when qualifying for a mortgage. Lenders ask them to sign a copy to confirm that nothing has changed about their financial situation, like losing a job.
Promissory note: This is the buyer's promise to pay the loan for your condo. It usually includes the amount of the mortgage, the interest rate they pay, the number of monthly payments and where to send the payment.
Proof of home insurance: This shows lenders that the condo is properly insured against loss. Buyers should contact their insurance company at least a few days prior to closing and have them issue a new policy for the condo.
Title documents: This documentation, in addition to the deed, shows the buyer that they own the property. This includes the title insurance commitment, which states who owns the home and whether there are any liens on the condo. The affidavit of title is another title document. It’s a statement from the sellers confirming they owned the property and did not have any liens or disputes on it.