You’ve completed your appraisal contingency and are ready to close. Or are you?
Before you close, it is important that you get prepared for closing. The actual closing can move up or back based on the availability of the parties involved, the bank, the closing agent and other factors. Closing day can be frenetic, and it is vital that Buyers be prepared ahead of time.
Assuming you have cleared the appraisal contingency and have a mortgage commitment, you probably have some conditions, or stipulations, to satisfy for your lender. Hopefully these are straight-forward, uncomplicated items like updated paystubs and bank statements or verification of employment.
You’ll also need to obtain homeowner’s insurance, and pre-pay a year of the premium. Your lender will require you to obtain an insurance policy naming the bank as an additional insured party. You can put your insurance agent in touch with your loan officer to get the endorsement information right.
Your lender will also ask you to provide a title report and evidence of title insurance, which is generally done by your attorney or title agent. A title report gives you as the owner and your lender a history of the property you’re purchasing and confirms there are no liens against the property or “clouds” against the title, which would prevent you from re-selling the home in the future.
Buyers should be prepared to get their movers lined up and utility accounts open ahead of closing, too. Depending on where you are buying, this may mean calling separate utility companies for electric, gas (or oil), water, etc. or in some cases the multiple utilities may be handled by the same company. Your Realtor can provide you with this contact information if he or she is familiar with the area.
The actual closing itself will usually take place in the Buyer’s settlement agent’s office, typically the Buyer’s attorney, although a mutually convenient location can be arranged. The buyer’s settlement agent will tell the Buyer usually on the morning of the closing the exact amount of money to bring to closing in the form of certified funds.
At the closing table, the Buyer will begin by reviewing the HUD-1 Settlement Statement with their attorney or closing agent. The HUD-1 delineates, item-by-item, what you as the Buyer are paying for at closing: lender’s fees, escrows, title charges, survey, attorney’s fees, etc. Once this is done, the Buyer’s attorney or closing agent will review the lender’s closing package, which can be quite voluminous. Each page will need to be reviewed and initialed or signed by each borrower. Once this is done, the Seller’s end of the closing will commence: delivery and review of the Deed, Affidavit of Title and Keys. Proceeds will be dispersed, checks will be cut and you will the new owner of the home!