Over the next 12 weeks, this blog will focus in on the many parts of purchasing a home. We know that purchasing a home—whether it be your first or your fifteenth—can be stressful and confusing.
But it doesn’t have to be! We help people buy homes all the time! This series explores and explains the typical roadmap to purchasing a home. Some steps are more cumbersome than others, but if you know what to expect you won’t be taken off guard if (and when!) complications arise!
We’re entering the final stretch of this series with this post on closing! Congratulations! Your journey is nearly at an end, and you’re mere days away from calling a new house your home. It’s an exciting time, but don’t get too comfortable. There’s still some work to do, so let’s get down to business.
The first step is reviewing your preliminary closing disclosure. A closing disclosure is basically a big receipt of your home transaction. It includes all fees, adjustments, the specifics of your loan, impounds, title charges, commissions, government transfer charges, payoffs, and other charges. Your lender should send it to you at least 3 days before closing. Review this carefully with your agent in case there are changes to be made before closing. If there are changes to be made, you'll submit those changes to your lender, who will then make those changes before sending the approved closing disclosure to the closing attourney. The closing attourney then inputs the seller's information before sending along a finalized closing disclosure for all parties to sign at the closing table.
Why do you have to wait three days before closing? To make absolutely sure that your lender is giving you the same deal at closing that they promised at the beginning of your mortgage process. The three-day process is because of a law called TRID and it’s designed to protect buyers from deceptive lending practices. Compare the closing disclosure against what your lender promised you at the start of your home buying process to make sure nothing has changed. If something has, let yor agent know and you can start to get it all straightened out.
I've read and approved the closing disclosure. Now what? Most contracts allow the buyer to take a final walkthrough of the property. Take advantage of this! If there were any repairs to be made, make sure that the seller upheld their end of the deal. If there are repairs yet to be made, request that the seller put the repair funds in an escrow account. And, if you haven’t already, make sure that all utilities are scheduled to transfer to your name on or before your closing date.
Once the closing disclosure is squared away, you’ll need to wire funds to your lender at least 24 hours prior to closing.
At closing, you’ll sit down with the home seller, their agent (if they have one), your lender, the closing attorney, the title company representative, and your agent. You’ll sign a bunch of papers, which will be associated with one of two aspects of the transaction:
- legal documents, including
- an agreement between you and your lender outlining the specifics of your loan
- an agreement between you and the seller outlining the transfer of the property
- payments, including
- closing costs
- escrow items
- see if you can wrap up some of these fees into the loan balance to keep things simple--you’ll be paying the same amount, so why not keep everything in one spot?
What should you bring? Bring money in an acceptable form. While a cash buyer bringing all $800,000 in huge canvas bags with dollar signs printed on the side is a pretty entertaining image, most people bring a check made out to the escrow company. Alternatively, they’ll simply wire funds straight to the recipient. Oh, and bring a pen. Just in case.
What documents will you recieve? You’ll walk away from closing with a copy of your closing disclosure, the loan estimate, the initial escrow statement, your mortgage note, the mortgage or deed of trust, and your certificate of occupancy (if you’re moving into new construction).
As with anything you sign, make sure you’re reading the entire document. Don’t leave spaces blank, and if you’ve got questions, be sure to ask. Closing on a home is a big deal, so don’t let your nerves get to you. While your agent will make sure that you’re not accidentally agreeing to name your next child Vlad, it’s ultimately your signature on the paper, not theirs.
Viola! you’re a new homeowner! The deed is done and you can breathe easy.
Believe it or not, this series isn’t over! Next week we’ll tie up some loose ends that we have yet to cover on this series such as credit bureau scoring, how to make the mortgage process easier, and more. Until next week, if you have concerns or questions that we didn’t touch on in this post, give us a call!
The Better Buyer Series
- Searching for a Home
- Costs Associated with Buying a Home
- Putting an Offer on a Home
- Binding Contracts
- Due Diligence
- Finance Contingency Period
- Things to Remember