The process of closing a home loan differs across the country. However, there
are common elements of this process. Knowing what to expect and being prepared
will make the closing an event you look forward to, rather than one to dread.
WHAT IS CLOSING?
It is the consummation of a real estate transaction. The closing includes the
delivery of a deed, financial adjustments, the signing of notes, and the
disbursement of funds necessary to complete the sale and loan transaction.
SETTING THE CLOSING DATE?
Not all closings are equal. Make sure to set a date that’s in your best
interest. Some things to consider are:
- Does it give you enough time to prepare your move?
- Is it near the end of your lease so you won’t pay unnecessary rent?
- Are there tax implications? (if it falls at year’s end, would you be
better off pushing it into January?)
WHAT DO YOU DO ON CLOSING DAY? FINAL WALK THROUGH?
The day before or the day of closing the buyer goes with the agent to do a
Final Walk Through. This is your last chance to inspect your new premises
and make sure that the seller has completed all repairs and met the conditions
specified in the purchase contract. Check that everything is in the home
and in working order. Check the plumbing (that there are no obvious leaks),
that all appliances are in working order, check the appearance, check that
light fixtures and statuaries, etc, remain in the home that were agreed upon.
WHO IS INVOLVED?
Closings must be coordinated with many parties that may include:
- The Seller
- The Buyer
- The Lender
- The Sellers mortgage holder
- Respective attorneys
- The real estate agent
- The transfer agent (If it’s a co-op)
- The managing agent (If it’s a condo)
- The title company representative.
SELECTING A CLOSING AGENT?
A third party agent of your choosing is needed to prepare the required documents,
disburse the funds and activate the transfer of ownership. Your attorney,
the escrow agent, the title company or a professional closing agent can act
on your behalf.
WHAT SHOULD I BRING TO THE CLOSING?
Your attorney should tell you what certified checks to bring. Bring a your
personal checkbook for incidentals, your drivers license for proof of identification
+ proof of homeowners insurance.
TITLE SEARCH AND INSURANCE?
Title insurance companies review the history of your new home’s ownership
to insure that no one else has claims on your property. Title insurance is
required because it protects you and your lender against loss resulting from
a title dispute.
Sometimes title insurance companies or lending institutions require a survey
of the property to verify zoning location and boundaries. If there is an
existing survey it may only need to be updated.
WHAT IS A GOOD FAITH ESTIMATE?
Before your closing, your lender will give you a final ”Good Faith Estimate” of
Settlement costs to help you prepare for closing. It is a document, which tells
borrowers the approximate costs they will pay at or before settlement.
Often, you may select to lock in an interest rate at the time of your mortgage
commitment and lower it before closing if market conditions change for a
nominal fee. Some lenders allow you to lock in your rate anytime from application
up until five business days before your scheduled closing.
LAST MINUTE DETAIL CHECK?
A few days before the closing, you’ll want to finalize all details with
your closing agent.
- Closing costs and escrow amounts: Your good faith estimate may not include
all closing costs such as interim interest or property taxes. Finalize actual
costs at this time with your closing agent to avoid last minute surprises.
- Acceptable method of payment: In most cases, certified or cashier’s
checks must be prepared in advance.
- Miscellaneous items: Some states require photo ID, evidence of hazard or
flood insurance or other miscellaneous documents. This is the time to gather
ID miscellaneous paperwork that may be required at closing.
- Document prep fee
- Loan fee
- Bank attorney
- Your attorney
- Recording fee
- Credit check
- Title insurance
- Points (A point is equal to 1% of the mortgage. If the mortgage is 100,000,
2 points is equal to $2000.)