Reaching the closing stage of a home purchase is a momentous occasion. However, the closing process often involves intricate details, extensive documentation and legal procedures. Therefore, thorough preparation for the closing day is of utmost importance. Below, you’ll find essential steps to guarantee your readiness for the final closing meeting.
Examine Your Closing Disclosure
The document you receive from your mortgage lender should be reviewed at least three business days before your scheduled closing date. This Closing Disclosure comprises crucial final information, including:
- The loan amount
- The interest rate
- The monthly principal and interest
- Prepayment penalty (if any)
- Estimated total monthly mortgage payment (including taxes, insurance, and other assessments)
- Closing costs
- Cash needed to close
Carefully reviewing the Closing Disclosure and addressing any significant disparities with the Loan Estimate in advance of the closing day is very important.
Perform the Final Walkthrough
As a standard practice, a final property walkthrough occurs approximately 24 hours before the closing. During this step, the buyer conducts an inspection to ensure that the property matches the agreed-upon condition.
The buyer confirms that the seller has completed any needed repairs beforehand and ensures that no new issues are found. Additionally, they confirm that the seller has vacated the property entirely, unless alternate arrangements have been made, and inspect for any damages that may have occurred during the seller’s move-out process.
If any discrepancies are identified, the closing may be postponed until they are resolved. The buyer’s real estate agent usually accompanies them during this phase to offer guidance and assist in resolving potential problems.
Get Your Funds Ready
To cover your closing costs, you’ll be required to either provide a certified check or arrange for a wire transfer. Know the exact amount and ensure you have the required funds ready ahead of time to avoid any last-minute issues.
Compile Your Essential Documents
Typically, a homebuyer is expected to provide the following documents:
- Photo identification: You will be required to present a valid form of identification, such as a driver’s license, passport or any government-issued ID, as proof of your identity as the buyer.
- Proof of homeowners insurance: This document serves as evidence of your sufficient insurance coverage for your new home.
- Closing disclosure: This document delineates the mortgage terms and associated expenses, making a thorough review essential before closing day.
- Loan estimate: After your mortgage application, the lender will furnish you with this necessary document. It contains comprehensive information about the proposed mortgage terms, closing expenses and the features of the loan program you’ve chosen. The data presented here should closely resemble, if not match, the details found in the Closing Disclosure.
- Certified or cashier’s check: This payment is intended to cover your closing expenses. In some cases, a wire transfer may also be an acceptable method of payment for these costs.
- Purchase agreement: This legally binding agreement, executed between a seller and a buyer, encompasses essential details such as the purchase price, deposit amount, closing date, property description and any conditions or contingencies that must be satisfied before the sale can be completed.
Keep in mind that the specific documents needed are based on your circumstances and local regulations. Talk to your real estate agent or loan officer in advance for details.
Be Aware of What You’re Signing
During your closing day, you will be executing numerous legal closing documents, which may include, among others, a deed of trust or mortgage, a promissory note and a closing disclosure.
Get a good understanding of every document before signing. Your real estate agent, attorney or escrow officer should be fully equipped to clarify any questions or concerns you may have regarding the documents.
Be Patient With Unpredictable Circumstances
While not common, unforeseen complications may surface during a real estate closing, despite diligent preparation. Here are some possible unexpected scenarios:
- Sudden changes to the closing costs: The ultimate closing costs might experience slight fluctuations compared to the initial estimate because of adjustments in prorated fees, such as property taxes or homeowners association dues.
- Title issues: Issues related to the title, such as undisclosed liens, may surface during the final title search. Once these title concerns are successfully resolved, the completion of your real estate transaction can proceed.
- Issues found during the final walkthrough: The revelation of undisclosed problems or damages could potentially cause a delay in the closing process.
- Holdups in fund transfers: On occasion, the funds required for the purchase may not arrive on time for the closing, particularly if there is a delay in the wire transfer process.
- Buyer or seller second thoughts: Although uncommon, there may be instances where a buyer or seller experiences a change of heart at the last minute.
- Paperwork inaccuracies: Mistakes occasionally occur and there may be errors in the loan documents or closing paperwork. These errors include misspelled names or incorrect loan amounts, necessitating correction before further proceedings.
Keep in mind that, while challenges may be stressful, many of them can be resolved with some additional time and patience. Stay composed, seek clarification by asking questions and bear in mind that the majority of issues in a real estate transaction are resolvable.
Getting ready for your mortgage closing day doesn’t need to induce stress. With a proactive approach and a good understanding of the process, your closing day is likely to go smoothly. Remember that this marks a significant milestone on your path to homeownership, so be sure to celebrate once all of the paperwork is complete!