Closing on a home is not something people do every day. Buying a home is one of the biggest investments a person will make in their lifetime. So it’s important to be prepared when you’re finally ready to close. The following tips will help.
Smoother Closing – Having Things Prepared
Before you sign any mortgage loan paperwork, it’s important that you have thoroughly inspected the property you’re buying. It’s better to know your new home needs a new roof before you sign the papers rather than to discover it once the deal is done. In addition to the required home inspection, many experienced homebuyers also make arrangements with the real estate agent and seller to have a trusted friend or repairman take a look at the property for a second opinion about any necessary repairs.
During your closing you’ll be signing and initialing lots of paperwork and it’s essential to know what you’re signing. You’ll want to verify that the paperwork reflects the interest rate your loan officer quoted. Now is the time to find out if there is a pre-payment penalty, when your first payment is due and where it should be sent. Make sure all your questions have been answered before you sign.
A vast majority of homebuyers have some out of pocket costs at their closings. You’ll need to make the necessary arrangements to have funds wired to the appropriate escrow account or a check picked up in time for your closing. In some cases getting checks printed or funds wired from your account to an escrow account can take several days. So give yourself more than enough time and follow up with the title company to ensure the wired money was received.
One way to avoid unnecessary costs at closing is to have the utilities transferred into your name before there is a gap between you and the previous owner’s shut-off date. You’ll also want to provide your escrow officer with the addresses, account numbers and contact information for your mortgage company, utilities (gas, electric, water and trash pickup), property taxes, maintenance and homeowners insurance before your closing. Be sure to have this information with you at closing in the event that the escrow officer needs more information.
Another item on your closing paperwork that you’ll want to verify is whether or not you’ve received a credit on your closing statement for any repairs you negotiated during escrow. Be sure the previous owner completed the agreed upon repairs and that they’re up to code before you close because you’ll have little recourse once the seller has your money. Your realtor is there to help you hold the seller accountable.
Your closing will go even more smoothly if you understand the various charges that make up your closing costs. One closing cost is escrow fees. Quite often the buyer and the seller agree to split the escrow fees. A credit check for the lender to verify your ability to pay for the loan is another fee. You’re also responsible for a document prep fee to cover the costs of mortgage and escrow company employees preparing your documents. Title insurance is another fee you’ll have to cover. Without title insurance a lender won’t loan you any money because they can’t guarantee their interest in the property especially, though unlikely, if the property’s title history was blemished. Finally, you’re also responsible for any miscellaneous fees like those incurred by the courier to transport your paperwork from the title company to the escrow company, an underwriting fee and a few hundred dollars more for any other miscellaneous fees.
Knowing what to expect when you close on your new home will help your closing to go more smoothly. Understanding what you’re signing benefits everyone involved and mortgage lenders are more than happy to answer your questions. Mortgage lenders are there to help.