One of the things that amazes me in the real estate business is how many investors leave hundreds or thousands of dollars on the table at closing due to errors in the closing documents.It is a mistake to assume that the HUD is correct or that the closing documents are correct. You need to take the time to read all the documents carefully before closing on any deal.
These are some of the areas to check thoroughly. If there is a realtor fee, make sure the percentages are correct and the payment amount to the realtor is right. Make sure you check the per diem interest to see if this figure is calculated correctly. Make sure that the figures on the HUD from the insurance company, a termite inspection, a home inspection or any other fee that should be carried to the HUD is correct. There have been many times when these figures were either incorrect or there were fees on the HUD that I had already paid out of pocket before the closing.
Check to make sure that the pro-rated tax figures or association fees are correct on the HUD. If you are due pro-rated taxes from your seller, make sure they show up as a credit on your side of the HUD. If there is a new loan amount or a payoff figure from a loan company make sure these figures are correct. This is another area where I have frequently found errors.
Make sure you also check loan documents carefully. Check the interest rate, the balloon and the amount of the note. I had a note and mortgage just this week where I was funding the deal for the buyer and the payee of the note and mortgage was the seller instead of me. They also had the balloon date wrong on the note. It showed a ten year balloon instead of a one year balloon because someone added a zero. If there is an interest only payment to be made each month, make sure this is clearly stated in the note and mortgage. Also make sure that terms for late fees are clearly stated if you are the person holding a note for your buyer.
All of these are important points to check before any closing occurs. Don’t assume the title agent will catch it. They do many closings each day and they usually are unable to catch every mistake. In addition, very often the title agent is transferring figures they got from other people such as the realtor or the lender or the insurance agent so they my not be aware that these figure are incorrect. It’s your closing, make sure the documents are correct so you don’t leave thousands at the closing table.
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