Now the hard parts of this home buying process is over. You found your dream home, worked out a deal you’re comfortable with and secured a mortgage– the final step is getting through one critical hurdle that’s lying ahead: The home closing process. Also referred to as “settlement” or “escrow” this is the big date when all parties involved meet to make this transaction official. To make sure you’re 100% ready, here’s what you need to know about the closing process step by step.
No. 1: How To Prepare For A Closing
Review your closing disclosure form. If you’re receiving a loan, one of the smartest ways to prepare yourself is to thoroughly review your HUD-1 settlement statement. This will help to ensure that the buyer understands all terms of their loan. The HUD-1 settlement statement outlines your exact mortgage payments, a loan’s terms (such as interest rate and term) and the additional fees you’ll have to pay, called closing costs (which total anywhere from 2-7% of the price of the home you’re buying). Compare your HUD-1 to the good faith estimate your lender gave you at the outset; make sure they are similar and ask your lender to explain any discrepancies.
Final Walkthrough: A buyer’s contract typically allows for a walkthrough of the home 24 hours before closing. First and foremost, you are making sure the previous owner has vacated, unless you’ve granted a rent-back arrangement allowing them to have an extended period of time before moving. Next, you must ensure the home is in the exact condition agreed upon in the contract. If you had a home inspection done earlier and there were problems the seller agreed to fix, make sure those repairs were made. If you find any issues during your walkthrough, bring them to the sellers attention as soon as possible. But have no fear, worst case you can simply delay the closing until all is resolved.
No. 2: What To Bring To Closing
All Paperwork: It is very important to have proof of homeowners insurance, a copy of the contract with the seller, home inspection reports, anything the bank required to approve your loan, and a government-issued photo ID. Note; Newlyweds who have recently changed their name: ID must match the name that appears in the property title and mortgage.
Your Down Payment: Based on your disclosure form, you’ll already know exactly how much you will be forking over for the down payment and closing costs. Yet, since personal checks are not acceptable, be sure to ask before closing whether you will need to wire transfer the funds or if you’ll need to bring a cashier’s check. Also, bring a personal checkbook, that’s typically acceptable, to pay any unforeseen expenses that may pop up.
No. 3: What To Expect At Closing
A Lot Of People: Exactly who will be present at a closing depends on the state you live in but there are usually certain characters you can expect to make an appearance. They include the seller, seller’s real estate agent as well as yours, buyer and seller attorneys, a representative from a title company and sometimes a representative from the bank or lender in which you received your loan.
Title Clearance: Before you can own or “take title” to a home, most lenders will require a title search of public property records to ensure there aren’t any liens or issues with transferring the property into your name.
Signing Your Name A Lot: You will be signing your autograph on a pile of legal documents, so be prepared for a hand cramp if writing in cursive is not something you are used to.
Curveballs: Be Prepared for things to go awry at the closing, like someone gets stuck in a traffic jam, a document is missing or a name is misspelled. But don’t worry, just do what’s in your power to make the day go smoothly with ease. For instance, keep your schedule free the day of closing in case it runs over expected time. If all goes as planned, you will leave your home closing with a stack of documents (which you should save) and the keys to your new home!