Finding your home of choice. A comprehensive workbook to help you on your journey to homeownership! FCM NMLS #629700
We understand that a lot of important decisions come with buying a home. At FCM, we want to help you make the right choices. From deciding whether to rent or buy, to choosing the right loan program, to making your final choice on a perfect home, our comprehensive homebuying workbook has all the tools to help you make the right choices! Table of Contents Section 1 The Choice: Should I rent or buy?... 1 Section2 The Choice: Which financing option is best for me?... 9 Section 3 The Choice: Where do we go from here?... 17 Section 4 The Choice: How does this all come together?... 23 Worksheets... 29 Glossary... 34
Section 1 The Choice: Should I rent or buy?
The Choice: Should I rent or buy? Am I ready to buy? Deciding whether to rent or buy is a big decision. While there are many advantages to owning your home versus renting from a landlord, there are also many factors that come into play when making the final choice to buy rather than rent. In this section we will guide you through several activities to help you make the right choice. Questions to Consider Are the benefits of owning worth it? Do I understand the star t up costs? Do I understand the ongoing costs of owning a home? Do I have good credit? Am I financially ready? >>> If you can answer yes to all of these questions by the end of this section you may be ready to buy! 2
Section 1 Benefits of Owning You ll have no restrictions from a landlord Your house is your own, you have the flexibility to live with limited constraints! You ll receive tax benefits* You can deduct the interest from your mortgage loan and your property tax from your income tax! You ll be making a good investment The mortgage payment you make each month goes toward something that you will eventually own free and clear that could even increase in value! Every rent check you write is money you will never see again. You ll have more stable housing costs Rent typically increases from year to year, but with a fixed-rate mortgage your monthly principle and interest payment will remain the same. *Consult your tax advisor for specifics Are the benefits of owning worth it?>>> (List your reasons for buying a home) 3
The Choice: Should I rent or buy? Understanding the Start Up Costs Down Payment A typical down payment is 20% of the sales price, but special financing programs offer down payments as low as 3%! Home Appraisal This is a professional analysis of what the property is worth. Home Inspection You may want a detailed report on the structural and mechanical soundness of your home. Closing Costs These include attorney fees, settlement fees, title insurance, recording fees, appraisal fees and other costs to close the loan. Moving Costs The price it costs to move varies depending on the distance you re moving, how much you have to move and if you hire movers. Do you understand the start up costs?>>> (Fill in the cha rt) Down Payment Home Appraisal Home Inspection Closing Costs 3%-20% $375-$650 $200-$1,000 4%-7% of cost of house $ $ $ $ Movings Costs Varies $ 4
Section 1 The Ongoing Costs of Owning In addition to the start up costs, there are many ongoing costs that come along with owning a home. Mortgage Payment Your monthly mortgage payment will depend on the price of your home, your down payment and the loan program you choose. Your Loan Originator will help you find an amount you re comfortable with. Taxes and Insurance Property taxes can vary by city, county and state. Homeowners insurance is also a mandatory cost of owning your home and can vary depending on the location and value of the home. Homeowners Association Dues These dues cover maintenance costs for the neighborhood. Lawn Maintenance and Home Repairs Utilities Your Mortgage Payment $ Taxes $ Do you understand the ongoing costs?>>> (Fill in the cha rt) Homeowners Insurance Condo Maintenance Fees HOA Dues Utilities Lawn Maintenance Varies $200-$350/ month Varies $300-$700/ month $100-$500/ month $ $ $ $ $ Home Repairs $100-$500/ month $ 5
The Choice: Should I rent or buy? Understanding Your Credit Score Having your credit checked is an important part of the mortgage loan approval process. Lenders will use your credit score to determine if you are likely to pay back your loan so it is very crucial to make sure you have good credit when making the choice to purchase a home. You are able to review your credit report for free annually at www.annualcreditreport.com The pie chart below shows a breakdown of how your credit score is determined. Excellent [Above 720] Good [680-720] Fair [620-679] Poor [580-619] Very Poor [Less than 580] *Pie chart borrowed from http://www.home-buyingaction-guide.com/understanding-credit-report-score.html Do you have good credit? >>> (Fill in the checklist) I ve never been late or missed a payment on my credit cards and other loans. I don t have any maxed out credit cards. I don t have other debts or loans. I haven t applied for many other loans or credit cards in the last two years. My credit history is long. 6
Section 1 Being Financially Ready Now that you understand the start up and ongoing costs of buying a home and you have a good idea of your credit score, you need to take some time to consider if you are financially ready for homeownership. Look back at your answers to the activities in this section and consider the checklist below to determine if you are financially ready to become a homeowner. I feel secure in my job Are you financially ready? >>> (Fill in the checklist) My current income should stay the same or increase If applicable, my co-borrower feels financially ready I have money saved to cover large, unexpected expenses 7
Section 2 The Choice: Which financing option is best for me?
The Choice: Which financing option is best for me? So many options for financing! Deciding which financing option is best for you is difficult. You need to consider everything from how much home you can afford to how many years you want to be paying your loan. Your FCM Loan Originator will be your guide through the prequalification process. This section will give you a better idea of the financing options available. By the end you should feel confident in your choice. Questions to Consider How do I get prequalified? How much home can I afford? How much will my down payment be? Fixed-Rate Mortgage or Adjustable-Rate Mortgage? Am I better off with a 15 or 30 year loan? >>> If you know the answer to all of these questions by the end of this section you will be on your way to buying a home! 10
Section 2 Prequalification Getting prequalified by a lender is the best way to get a general idea of how much you can spend on a new home. In order to evaluate your income and assets your lender will ask you several questions. Refer to the list below to prepare yourself for the prequalification process. Questions for the borrower: How long do you plan to live in your new home? What is your anticipated purchase price? What would you like your monthly payment to be? If you plan to put money down, how much? What is the anticipated closing date of your new home? Who were you referred by? Where will your down payment come from? Required information for borrower Name Have you ever owned a home? Current address How long have you lived at this address? What is your monthly house or rent payment? Date of birth Social security number Home/cell phone number Email address Income Are you paid hourly or salary? Current employer How long have you been employed by your current employer? Asset accounts Checking/savings balance 401k and/or IRA balance Other (i.e. tax refund or gift) <<< Are you prepared for the prequalification process? 11
The Choice: Which financing option is best for me? The Rule of Thumb To figure out how much home you can afford, it is a general rule of thumb to stay within these limits: 43% of income toward debts Generally your mortgage should not be more than 31% of your monthly income. If you follow this standard that leaves 12% of your income to put toward other debts such as student loans or car loans. 30% of income toward taxes 27% of income toward everything else This includes everything from food and clothes to vacations and entertainment to savings and investments. How much home can you afford?>>> (Circle the monthly payment you re comfotable with) Loan Amount $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 Est. Monthly Principal & Interest $537 $805 $1,074 $1,342 $1,610 $1,879 $2,147 *Rounded to the nearest dollar. This chart estimates the monthly principal and interest assuming a 30-year fixed rate mortgage at 5%. Taxes and insurance are not included. 12
Section 2 Deciding Your Down Payment Your down payment is the cash you pay toward the total cost of your home when you first purchase it. Figuring out how much you can afford for a down payment will help you determine what kind of loan you will need to have. Each different loan program requires a different down payment amount. FHA Loan- 3.50% Down Payment This is a loan insured by the Federal Housing Administration. This loan requires private mortgage insurance and upfront mortgage insurance. Conventional Loan- 3%-20% Down Payment Conventional loans offer many more options and varying down payment amounts. If you put 20% down you won t have to have mortgage insurance. VA Loan- 0% Down Payment This type of loan is available to American veterans and active duty personnel. VA provides the ability to purchase with no down payment. USDA/RD Loan- 0% Down Payment This loan is offered for rural properties and supported by the U.S. Department of Agriculture. This loan can only be used if the property you are buying is in an RD eligible area. DP % Cost of Home Down Payment How much will my down payment be?>>> 20% 10% $ $ x 0. 2 x 0. 1 $ $ (Fill in the cha rt to see options) 5% $ x 0.05 $ 3. 5% $ x 0. 35 $ 0% $ x 0 $ 13
The Choice: Which financing option is best for me? Mortgage Insurance Monthly Mortgage Insurance If your down payment is less than 20% and you use a conventional financing plan, you will need to pay monthly mortgage insurance. MI covers the bank if you default on your loan and stop paying your mortgage. Generally MI costs less than 1% of your outstanding loan balance, but it can add up to many thousands of dollars over time. Once you have paid enough principal to own more than 20% of your home you can apply to drop the MI. MIP for FHA Financing If you use FHA financing, you must have an up-front mortgage insurance premium and monthly insurance premiums (MIP). The amount for each of these is determined by the loan-to-value (LTV) and length of term of your mortgage. The up-front MI can be financed into your loan amount and current maximum is 1.75%. The monthly MI is currently a maximum of.85%. The monthly MI cannot be cancelled when maximum financing is utilized. PMI In addition, FHA also requires monthly mortgage insurance, often referred to as PMI (private mortgage insurance). Do you need mortgage insurance?>>> (Select one) My down payment is less than 20% I need MIP for FHA financing I don t need mortgage insurance 14
Section 2 15-year vs. 30-year loan This chart shows that you can save $103,014 in interest with a 15-year loan, but you will have a significantly higher monthly payment. $200,000 loan Monthly Payment Total Payments 15-year loan (3.75% APR) $1,454 $261,800 30-year loan (4.5% APR) $1,013 $364,814 Fixed-Rate vs. Adjustable Rate Fixed-Rate Mortgage Pay the same interest rate the entire length of the loan Interest rates are higher Best to use if you plan to stay in the home several years Available in 10, 15, 20, 25, and 30 year time periods Adjustable-Rate Mortgage The rate can increase or decrease with changes in the market Interest rates are slightly lower at first, but they can change Your monthly payment may change Best to use if you plan to sell in 5-10 years 15
Section 3 The Choice: Where do we go from here?
The Choice: Where do we go from here? I m ready to buy, now what? Once you are prequalified and know how much house you can afford, you can move forward in the homebuying process. A real estate agent will help you through the actual home search. This section will show you everything from how to find the right real estate agent to making an offer on the perfect house. Questions to Consider Who will be my Real Estate Agent? What is the perfect house for me? How do I make an offer? >>> If you know the answer to all of these questions by the end of this section you will have found your perfect home! 18
Section 3 Reasons to use a real estate agent Your real estate agent will be your partner in the homebuying process. No cost Agents typically get their commission from the seller of a house. As a buyer you don t lose anything by using an agent-- using one is to your benefit! Access to listings While you can sometimes find properties on your own by searching online and attending open houses, an agent is the best point of access for all homes. He or she can set up showings for homes you are interested in. Knowledge A real estate agent has experience with homes and will be able to offer insight into neighborhoods, schools, pricing and features of the home. Negotiating power A good agent will help you in negotiating a fair price for the home. An agent will also write the offer letter and present it to the seller s agent. Who is your Real Estate Agent? >>> (Fill in the char t with options) Real Estate Agent Phone Number 19
The Choice: Where do we go from here? Finding your perfect home There is a lot to consider when trying to find your perfect home. It s a good idea to make a list of qualities you must have in a home and qualities you would like to have in a home. This list will be a good reference when you begin your home search and it will give your real estate agent guidelines to work with. Look over the list of common considerations below and make your list of must-haves and desires for your home. Type of home You could buy a detached single-family home or a condo. You also have the choice to buy a new home or a used home or a fixer-upper. Location Location is a huge factor for many homebuyers. Consider what your commute to work will be like. If you have children, look into the school districts of the locations you re considering. Features Think about how many bedrooms and bathrooms you need in your home and the features of rooms like the kitchen and family room. Do you want a pool or a certain size garage? There are endless combinations of features in a home so make sure you have a list of needs versus wants. Resale value Even if you don t plan on moving it is wise to take the potential value of resale into consideration when buying a home. What is your perfect home? >>> (Fill in the char t) Type of home Condo Single-family home Location Desired Features # beds # baths Can you resell? Yes No 20
Section 3 Making an offer Once you find the perfect home you will need to make an offer. Your real estate agent will help you with this and tell the seller how much you are willing to pay. A good initial offer should be based on the following: Prices of similiar homes Your agent can look up the values and selling prices of the other homes in the neighborhood. Condition of the house Your real estate agent might refer you to a professional home inspector to get a good idea of the home s true condition. What you can afford You should have a good idea of your price range based on your prequalification. Is the asking price too high? >>> (Select any that apply) The house has been on the market for a long time The listing price dropped Prices of similiar homes are much lower 21
Section 4 The Choice: How does this all come together?
The Choice: How does this all come together? My offer was accepted, now what? You are almost there! At this point in the process almost everything is out of your hands and your Loan Originator will be working hard to make sure your loan closes on time. This section will guide you through any additional documents you might need and explain what exactly happens during the loan process and the closing. Questions to Consider How do I complete my loan application? Should I lock in my rate? How do I get Homeowners Insurance? What happens at the closing? >>> If you can answer these questions by the end of this section you may be ready for homeownership! 24
Section 4 Your loan application Documents After you apply, your Loan Originator will ask for several documents. Refer to the worksheet in the back for a complete checklist of documents you ll need to gather. Based on the property, application details and terms requested, additional documents may be requested by your Loan Originator. Purchase Contract After your offer is accepted you will need to provide a signed purchase contract. Locking your Rate Your Loan Originator will ask if you want to lock in your interest rate. Locking your rate keeps your interest rate the same even if rates go up or down during the time it takes for your loan to be approved. Is your application complete? >>> (Fill in the checklist) My Loan Originator has all my documents I turned in a signed purchase contract I know if I m locking my interest rate My rate lock time period covers me until the closing date 25
The Choice: How does this all come together? During the loan process Once you complete your loan application, a loan processor will review it in more detail. During this period of time you, your lender, and your real estate agent will fulfill final tasks to ensure a smooth closing. Your task: Homeowners Insurance Homeowners insurance is required before your loan can close. It covers the cost of any repairs or rebuilding if any damage happens to your home. Shop around online and contact various insurance companies to get an estimate of the cost. Your lender s task: Schedule a home appraisal Order title insurance Your real estate agent s task: Schedule a home inspection Schedule a pest inspection Did you find options for homeowners insurance? >>> (Fill in the char t) Insurance Provider Estimated Cost 26
Section 4 The Closing-- the final details The closing, which can also be called settlement or consummation, is the transfer of the title of the house from the seller to the buyer (you). Generally, the seller completes their paperwork first, while the buyer signs next. The details of the mortgage loan contract are also executed at the closing. Good Faith Estimate (GFE) / Loan Estimate (LE) You will receive a settlement cost disclosure within three days of submitting your intial application. This estimate quotes all pertinent closing fees, lender charges and applicable settlement costs. HUD1 Settlement Statement / Closing Disclosure (CD) The day before closing, you will receive a detailed list of all settlement costs. This breakdown will closely resemble your initial GFE or Loan Estimate. What to Bring Be sure to bring a photo ID to the closing. For the down payment you will need a cashier s check or wired funds to pay for the charges due on closing day. Handing over the keys Congratulations! You are officially the owner of your new home! This is the last step in the homebuying procress and it s time to celebrate! Are you ready for closing day? >>> (Fill in the checklist) My list of closing costs matches my GFE/LE I have a photo ID I have proof of homeowners insurance I have a cashier s check 27
Worksheets What documents do I need? What do I want in a home?
Application Documentation For your convenience we have compiled a checklist of all the documents your Loan Originator will need after you apply for your loan. Though these are not required until after you have submitted your application, it is a good idea to begin to gather these documents as early as possible. The following pages include home feature checklists to bring along on your home search. 30 days of your most recent pay stubs W2 forms (last 2 years) Tax returns (last 2 years) Last 60 days of bank statements (all pages) Letter of explanation for any adverse items on credit report Copy of photo ID and Social Security Verification Insurance agent name and phone number 30
Worksheets House Tour #1 Address Price Property Taxes Age of Home Style of Home Two Story Ranch Split Level Traditional Contemporary Cape Cod Townhouse Condo Type of Construction Wood Brick Stone Stucco Vinyl Siding Aluminum Siding Interior Features Total Bedrooms Total Bathrooms Living Room Family Room Great Room Dining Room Eat-in Kitchen Pantry Disposal Refrigerator Gas Range Electric Range Wall Oven Dishwasher Laundry Room Washer Dryer Skylights Whirlpool Tub Soaking Tub Good Closet Space Yes No Basement Yes No Finished Flooring Carpet Hardwood Tile Utilities Type of Heating Hot Water Gas Electric Oil Insulation Fiberglass Cellulose Foam None Central Air Yes No Plumbing Condition Good Fair Poor Sump Pump/Drainage System Yes No Connected to Sewer System Yes No Age of Heating System Age of Water Heater Capacity Age of Electrical Wiring Exterior Features & Neighborhood Backyard Area Front Yard Patio Deck Porch Pool Fence Landscaping Expansion Ability Garage 1 Car 2 Car 3 Car Detached Roof Condition Good Fair Poor Sidewalks Yes No Well Maintained Neighborhood Yes No Easy Proximity to: Work Schools Shopping Public 31
House Tour #2 Address Price Property Taxes Age of Home Style of Home Two Story Ranch Split Level Traditional Contemporary Cape Cod Townhouse Condo Type of Construction Wood Brick Stone Stucco Vinyl Siding Aluminum Siding Interior Features Total Bedrooms Total Bathrooms Living Room Family Room Great Room Dining Room Eat-in Kitchen Pantry Disposal Refrigerator Gas Range Electric Range Wall Oven Dishwasher Laundry Room Washer Dryer Skylights Whirlpool Tub Soaking Tub Good Closet Space Yes No Basement Yes No Finished Flooring Carpet Hardwood Tile Utilities Type of Heating Hot Water Gas Electric Oil Insulation Fiberglass Cellulose Foam None Central Air Yes No Plumbing Condition Good Fair Poor Sump Pump/Drainage System Yes No Connected to Sewer System Yes No Age of Heating System Age of Water Heater Capacity Age of Electrical Wiring Exterior Features & Neighborhood Backyard Area Front Yard Patio Deck Porch Pool Fence Landscaping Expansion Ability Garage 1 Car 2 Car 3 Car Detached Roof Condition Good Fair Poor Sidewalks Yes No Well Maintained Neighborhood Yes No Easy Proximity to: Work Schools Shopping Public 32
Worksheets House Tour #3 Address Price Property Taxes Age of Home Style of Home Two Story Ranch Split Level Traditional Contemporary Cape Cod Townhouse Condo Type of Construction Wood Brick Stone Stucco Vinyl Siding Aluminum Siding Interior Features Total Bedrooms Total Bathrooms Living Room Family Room Great Room Dining Room Eat-in Kitchen Pantry Disposal Refrigerator Gas Range Electric Range Wall Oven Dishwasher Laundry Room Washer Dryer Skylights Whirlpool Tub Soaking Tub Good Closet Space Yes No Basement Yes No Finished Flooring Carpet Hardwood Tile Utilities Type of Heating Hot Water Gas Electric Oil Insulation Fiberglass Cellulose Foam None Central Air Yes No Plumbing Condition Good Fair Poor Sump Pump/Drainage System Yes No Connected to Sewer System Yes No Age of Heating System Age of Water Heater Capacity Age of Electrical Wiring Exterior Features & Neighborhood Backyard Area Front Yard Patio Deck Porch Pool Fence Landscaping Expansion Ability Garage 1 Car 2 Car 3 Car Detached Roof Condition Good Fair Poor Sidewalks Yes No Well Maintained Neighborhood Yes No Easy Proximity to: Work Schools Shopping Public 33
Important Terms and Definitions Adjustable-Rate Mortgage (ARM) A mortgage loan that does not have a fixed interest rate. During the life of the loan the interest rate will change based on the index rate. Also referred to as adjustable mortgage loans (AMLs) or variable-rate mortgages (VRMs). Amortization A payment plan that enables you to reduce your debt gradually through monthly payments. The payments may be principal and interest. The monthly amount is based on the schedule for the entire term or length of the loan. Annual Percentage Rate (APR) A measure of the cost of credit, expressed as a yearly rate. It includes interest as well as other charges. Because all lenders, by federal law, follow the same rules to ensure the accuracy of the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans, including mortgage plans. APR is a higher rate than the simple interest of the mortgage. Closing Costs Fees for final property transfer not included in the price of the property. Typical closing costs include charges for the mortgage loan such as origination fees, discount points, appraisal fee, survey, title insurance, legal fees, real estate professional fees, prepayment of taxes and insurance, and real estate transfer taxes. A common estimate of a Buyer s closing costs is 4-7% of the purchase price of the home. Collateral Security in the form of money or property pledged for the payment of a loan. For example, on a home loan, the home is the collateral and can be taken away from the borrower if mortgage payments are not made. Credit Score A score calculated by using a person s credit report to determine the likelihood of a loan being repaid on time. Scores range from about 350-850: a lower score meaning a person is a higher risk, while a higher score means that there is less risk. 34
Glossary Default The inability to make timely monthly mortgage payments or otherwise comply with mortgage terms. A loan is considered in default when payment has not been paid after 60 to 90 days. Once in default the lender can exercise legal rights defined in the contract to begin foreclosure proceedings. Down Payment The portion of a home s purchase price that is paid in cash and is not part of the mortgage loan. This amount varies based on the loan type, but is determined by taking the difference of the sale price and the actual mortgage loan amount. Earnest Money (Deposit) Money put down by a potential buyer to show that they are serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal. During the contingency period the money may be returned to the buyer if the contingencies are not met to the buyer s satisfaction. Equity An owner s financial interest in a property; calculated by subtracting the amount still owed on the mortgage loan from the fair market value of the property. Escrow Funds held in an account to be used by the lender to pay for home insurance and property taxes. The funds may also be held by a third party until contractual conditions are met and then paid out. Fixed-Rate Mortgage (FRM) A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change. Good Faith Estimate/ Loan Estimate An estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application. 35
Home Inspection An examination of the structure and mechanical systems to determine a home s quality, soundness and safety; makes the potential homebuyer aware of any repairs that may be needed. The homebuyer generally pays inspection fees. Homeowner s Insurance An insurance policy, also called hazard insurance, that combines protection against damage to a dwelling and its contents including fire, storms or other damages with protection against claims of negligence or inappropriate action that result in someone s injury or property damage. Most lenders require homeowners insurance and may escrow the cost. Flood insurance is generally not included in standard policies and must be purchased separately. Interest Rate The amount of interest charged on a monthly loan payment, expressed as a percentage. Jumbo Loan Or non-conforming loan, is a loan that exceeds Fannie Mae s and Freddie Mac s loan limits. Freddie Mac and Fannie Mae loans are referred to as conforming loans. Loan Originator A representative of a lending or mortgage company who is responsible for soliciting homebuyers, qualifying and processing of loans. They may also be called lender, loan representative, account executive or loan rep. Loan Origination Fee A charge by the lender to cover the administrative costs of making the mortgage. This charge is paid at the closing and varies with the lender and type of loan. A loan origination fee of 1 to 2 percent of the mortgage amount is common. Points A point is equal to one percent of the principal amount of your mortgage. For example, if you get a mortgage for $95,000, one point means you pay $950 to the lender. Lenders frequently charge points in both fixed-rate and adjustablerate mortgages in order to increase the yield on the mortgage and to cover loan closing costs. These points usually are collected at closing and may be paid by the borrower or the home seller, or may be split between them. 36
Glossary Pre-Qualify A lender informally determines the maximum amount an individual is eligible to borrow. This is not a guaranty of a loan. Principal The amount of money borrowed to buy a house or the amount of the loan that has not been paid back to the lender. This does not include the interest paid to borrow that money. The principal balance is the amount owed on a loan at any given time. It is the original loan amount minus the total repayments of principal made. Private Mortgage Insurance (PMI) Insurance purchased by a buyer to protect the lender in the event of default. The cost of mortgage insurance is usually added to the monthly payment. Mortgage insurance is generally maintained until over 20 Percent of the outstanding amount of the loan is paid or for a set period of time, seven years is normal. Mortgage insurance may be available through a government agency, such as the Federal Housing Administration (FHA) or the Veterans Administration (VA), or through private mortgage insurance companies (PMI). Rate Lock A commitment by a lender to a borrower guaranteeing a specific interest rate over a period of time at a set cost. Real Estate Agent An individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker. Settlement Another name for closing, this is the final step in property purchase where the title is transferred from the seller to the buyer. Closing occurs at a meeting between the buyer, seller, settlement agent, and other agents. At the closing the seller receives payment for the property. 37