Making Closing Make More Sense

It’s no secret that closing on a property is a chaotic, confusing experience for most home buyers. Even experienced buyers purchasing their second or third home find the process intimidating: From last-minute changes in the money they must bring to the table to the mountain of confusing documents they must sign and supposedly review. Stories of closing documents being literally printed out at the conference table are not uncommon.

Currently, the law allows buyers to request one day to review closing documents, but few homebuyers invoke this right, partially out of a desire to get things over with and partially because the sheer volume of documents makes meaningful review by non-lawyers impossible. As a result, the recently proposed extension of this provision to three days is not going to solve any problems. Closing documents currently come in four basic categories:

• Junk documents that have no meaning at all for the homebuyer. Collecting these together would save time right off the bat.
• Educational documents. Having these clearly identified would allow homebuyers to concentrate their review time on these in order to understand everything else.
• Future-use documents. These have no impact on closing, but are important for the future and should be noted.
• The actual transactional documents. These are the “red meat” of the closing and should be what the homebuyer actually pays attention to.

No amount of review time will fix the closing process. What really needs to happen is simplification of standard documents and better organization of documents so consumers can rationally review necessary information and make intelligent decisions – whether at home for three days or when sitting at the conference table with the other parties. Until that happens, homebuyers will continue to rely on their attorneys for guidance at all closings.