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 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.
PROPERTY SURVEY?
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.
RATE LOCK?
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.
CLOSING COSTS?
- Insurance
- Taxes
- Document prep fee
- Loan fee
- Bank attorney
- Your attorney
- Recording fee
- Application
- Credit check
- Appraisal
- Title insurance
- Points (A point is equal to 1% of the mortgage.
If the mortgage is 100,000, 2 points is equal to $2000.)
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