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Real Estate Transaction Walkthrough


Every real estate transaction is a little bit different but there are some commonalities among them. 

Create Loan Note for Each Lender

There are two main documents that will be created for any real estate transaction are the loan note and the mortgage. The loan note is the contract between the borrower and the lender that contains details such as the length of the loan, the amount of the loan, the monthly payment amount, who the borrower and lender are, and additional terms that all parties will abide by. This document should be drafted by a lawyer (or obtained from a credible source such as Legal Zoom) but can be made into a template and reused for all future transactions.

All Documents Signed

At this stage, all parties should have signed all applicable documents. In some cases, for example, unilateral loan notes, only one party will sign the note.

Signed Documents Distributed to All Parties

Once all parties have signed all appropriate documents, a signed copy should be given to everyone involved in the transaction. This is generally done by the person who initially created the document. For example, if a mortgage is written by a lawyer, the lawyer will be responsible for distributing the signed copy.

Master Mortgage Document Created by Attorney/Title Company

The master mortgage is generally created by a lawyer and is the document that will be recorded at the county clerk’s office. The mortgage has all parties involved in the transaction Depending on how the transaction is structured, only borrowers may have to sign this document.

Wiring Instructions Sent to Lenders

Before closing but once all documents have been signed, you will receive wiring instructions from the borrower’s attorney or title company. These instructions will include the name, address, phone number, and email address of the title company or attorney as well as the routing and account number for their bank account.

It’s very important to verify that the wire instructions you receive from the title company or attorney are correct. We strongly recommend that you call the title company or attorney from a trusted number (such as their website) to verify that you have received the correct information.

A wire transfer is different than an ACH transaction (often called a check by phone) in that it will be transferred to the receiving bank account almost instantly.

Funds are kept in a special escrow account that is setup specifically to hold funds for real estate transactions. You should ALWAYS wire funds to the title company or attorney, NEVER to the borrower directly.

All Funds Confirmed by Lawyer

The attorney or title company will confirm that they have received all funds for the transaction.

Closing Complete

This is the point when the real estate ownership is transferred. This transaction is recorded at the County/Parish Clerk’s office.

Closing Documents Sent to Lenders by Attorney/Title Company

Once the closing has taken place, the borrower’s attorney or title company will send recorded copies of the mortgage as well as a document called a HUD-1 to the lender.

Setup Payments to Lenders

Once closing has happened, it’s time for the borrower to setup regular payments to the lender. Depending on how the deal was structured, there may be no need for monthly loan payments so this step may be ommitted.

First Payment Made to Lenders

In this step, the first monthly payment is issued to borrowers.

Final Payments Issued

Once the borrower is finished with the funds that were lent, they will issue a final payment. This will include the initial amount borrowed plus any interest that hasn’t been paid yet.

Payoff Recorded by Attorney/Title Company

Once all money has been paid back to the lender, the borrower’s attorney or title company will record a “lien release” with the county/parish clerk’s office. This process formally documents that the loan has been paid off and the lien has been removed from the property.