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Preparing To Close on a House

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I’m soon going to be a homeowner less than 6 hours if all goes according to plan. There have been a few hiccups along the way including the roofing certification (not good enough), some fees (title insurance is 30% higher than the good faith estimate), and some minor mistakes all around. The only show-stopper is the roofing certification so I’m hopeful all can be resolved for the close at 4pm. On a semi-unrelated note, my girlfriend’s car overheated and was leaking “green and red” fluid which I took to mean coolant and perhaps transmission fluid. You might see a “buying a used car in under a week” article in the near future…

Roofing Certification

I received the roofing certification by fax this morning. Service was performed by Tri-County Roofing & Sheet Metal, Inc. located in Westminister, MD and according to the receipt they did a certification and a repair job. The cracked beam issue I mentioned earlier was repaired – itemized as “sister 2x6x8 to cracked tress,” but there was no mentioned of the FRT (fire retardant treated) activation issue. I called up the company but the estimator was out of the office and they will call me back. We will need to get something in writing before close to get this resolved because I refuse to pay for the repairs. The addendum releasing the home inspection specifically “correct any damage to roof shingles, plywood, and support beams.” It sounds like they corrected the support beam problem but not the plywood problem.

Update: The estimator for the roofing company assured me that the amount of chalky residue was normal for that brand of FRT plywood. The wood itself was in good condition and the roof appeared to have been replaced 10-12 years ago. But, the plywood is only 3/8″ thick, which is to code, and not half-inch – so there will be a little rolling. When the roof was first installed, they hadn’t started using H-braces (braces connecting the tresses, adding stability to the plywood) so it also contributes to the rolling effect. He believes the roof will be stable for at least an additional five years, though that obviously is not guaranteed or warrantied. At least now it sounds like he did look at the FRT and did decide it was in good condition – which is, bottom line, what I needed a certified roofer to do.

Rent Back

The contract stipulates that the seller can remain in the house until July 31st at the latest, paying me my PITI as rent. The PITI works out to be about $65/day so they’ll be prepaying the month of June at close and prepay July later on. The concern I have, which my agent needed to look into, was what about utilities? Since it isn’t specifically called out for in the contract, I will assume they are covering it but double check this at closing.

First Time Maryland Homebuyer’s Tax Break

In my research, I reported that first time buyers in Maryland receive a break on the State Transfer Tax, but the Settlement Statement prepared by my title company, Crown Title Corporation, had me paying my half of the state transfer tax. I shouldn’t have to pay the $750 tax – my agent is going to talk to the title company and get that settled. The title company responded by removing that item from the Settlement Sheet.

Title Insurance

The Good Faith Estimate prepared by the lender stated that the Title Insurance should be around $900. Now, they don’t set that price, they guessed based on the value of the home – but when Crown Title came back and will be charging me $1,200 it raised a red flag. Why is it 30% higher? The insuring company is First American Title Insurance and if their website’s rates are any indication, I would be paying $1,010 for the standard policy and $1,212 for Eagle coverage. So if I have Eagle coverage, this seems fair. If I’m getting standard, it looks like Crown is putting a little money into their pocket. Ultimately, I don’t think I’m getting screwed but I didn’t go into it as informed as I should have been (and as I usually prefer to be). I could’ve shopped around for title companies but that’s how it goes sometimes. The Good Faith Estimate was probably a little low.

Preparing for the Closing Meeting

I don’t think I can explain the final step (what to bring and what I will be doing) as clearly as this site has:

{ 6 comments, please add your thoughts now! }

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6 Responses to “Preparing To Close on a House”

  1. Jeff Running says:

    They will most likely end up paying for the utilities since my guess is that they are still listed under their name. If you transfer them to your name you might have some problems.

  2. jim says:

    For electricity, I believe that will be the case; with water, there is a “Water Adjustment” item in the settlement documents. I’ll have to ask what that means specifically.

  3. risk says:

    look like you have the title company fax you the settlement sheet before going to closing. Good. The last closing I went to, I asked for the sheet giving to me at least 2 days before the settlement day. Got it one day before after couple of calls. tight but made my own check. indeed there were things I called back and asked for clarifications.

    as for title insurance, I was informed that some discount would be given if seller can provide proof of buying title insurance as the time he/she acquired the property. I didn’t get it because the seller misplaced her settlement sheet (she bought it years ago)

  4. Tim says:

    Water is paid quarterly. So you will pay the difference. I forget if you pay ahead based on projected use or if you pay like electricity, based on a meter reading. I had to write a check to the sellers for $11 or so because they paid the water bill several days before I closed. Water, luckily, if the one thing in MD that is cheap–about $5 per month.

    About utilities, you had better clarify who is paying and make sure they add that as an addendum on the contract.

    I wonder, what happens if they trash the place before they leave? I would also have a clause in there that they clean or have a “check-out” list like apts have.

    Geez, you probably won’t even get this in time since you are closing at 4pm and I am writing this at 3pm! HAH!

  5. jim says:

    Risk,
    I’m going to see if I can get a discount on the insurance, thanks for the tip.

    Tim,
    We are going to clarify before we sign anything, I think having them pay is fair.

    We are going to do a walk through the day they leave. They are extremely reasonable and polite people, at least they are now :) , so I don’t think they’re going to trash the place. I don’t expect them to clean it before they leave though and they have pets (I’ll be getting pets too) so I will have to give it a good cleaning. Luckily neither smoke.

    I happened to just get back from the credit union with my “official check” for payment… it’s scary carrying around this much money… don’t worry, I keep up to date on the comments on my blog. :)

  6. Nikki Smith says:

    Hi Jim,

    Thanks for this great article. I’m writing to let you know Federal Title recently updated its website, so some of the links you included in your post are no longer active.

    Homebuyers in the DC Metro area can refer to the new Closing Documents page to prepare for settlement.

    Visit the new FAQs page to learn about closing in Maryland specifically: http://www.federaltitle.com/faqs/md-closing-questions

    Thanks!
    Nikki Smith
    Marketing Director
    Federal Title & Escrow Company


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