You’ve found the home you want, made an offer and the seller accepted. It’s a happy day, but now, you’re in the final stages of your journey toward homeownership, but you’re worried about stumbling at the finish line.
Whether you’re a first-time homebuyer or someone who hasn’t done it in a while, getting through the closing day the day you put the seal on the deal can seem daunting. Fortunately, we’re here to demystify the process and make things easier.
In the Weeks Leading Up to Closing
The last few weeks before closing may feel like they’re going to drag on forever, but there’s actually a lot to get done. This includes:
Removing All the Contingency Agreements
Unless you’re buying the home with cash and “as-is,” the deal is probably riding on a few contingencies. That usually means making sure that you resolve any open issues like the:
Home inspection: Buyers typically have their potential homes inspected by a third party to make sure that they understand what they’re buying. The home inspection can reveal problems that are just below the surface, and that gives you a chance to negotiate for fixes or a reduction in price.
Financing: The seller wants to make sure that the deal is good, so you have to get that final mortgage approval nailed down. That means getting the lender’s underwriting team anything they need as quickly as possible so they can verify that your financial situation and credit score haven’t significantly changed since you were pre-approved.
Appraisals: Your lender, too, probably has a few contingencies on the table. Given that real estate can fluctuate in value (especially in a volatile market), the bank wants to make sure that the house appraises at or above what they’re willing to lend you. As a buyer, you also want to make sure that you’re not paying more than you should for the property.
Reviewing Your Closing Disclosure Forms
You should also take this time to completely review your closing disclosure statement from the lender. In the heady moments leading up to an offer on a home and all the excitement after it has been accepted, you may have lost track of exactly what terms come with your loan.
Make sure that you compare the loan estimate you got from your lender with the mortgage that you’ll actually be paying. You should also make sure that the length of the loan, the interest rate, and the closing costs are what you expect.
This is also a good time to check in with your real estate professional and ask any questions you may have. For example, you may want to make sure that the seller plans to be out of the home on closing day and find out exactly when you’ll get the keys. You should also ask when and where closing is expected to happen whether that’s at the lender’s, the house, or the title company’s office. That can help ease a lot of confusion (and stress) when the time comes.
Right Before Closing Day
The day before closing is when two of the most important things need to take place:
Make Sure You Understand How the Transfer of Funds Happens
Usually, money gets wired to the seller or the title company handling the deal, but you want to make sure that you fully understand whether or not that’s what will happen with your deal. Sometimes a certified check is also needed for some part of the process, but you never want to show up at closing with cash on hand. It’s too much of a security risk.
Carefully Perform the Final Walk-Through of the Home
The vast majority of sales contracts allow the buyer to do a pre-closing inspection or “final walk-through” of the home 24 hours before closing. That usually means:
Making sure that there’s no new damage to the property since you last saw it (which can happen when the sellers move out and leave the home unattended)
Checking to see that everything is still in working order, including the AC unit, the heater, the plumbing, the automatic garage door, and the appliances
Making certain that all repairs the seller agreed to make have been completed to your satisfaction
Looking for fixtures and other items that were supposed to be left in the house or yard to make sure they weren’t surreptitiously removed by the seller
Seeing that the home was left in reasonably clean conditions (broom swept and no trash or old furniture lying around)
Most of the time, the final walk-through is pretty low-key and more of a formality than anything, but you don’t want to skip it. That’s a potential recipe for a very expensive disaster.
On Closing Day Itself
The actual closing day on your new home may feel a little anticlimactic (if you’ve done everything right) because it’s mostly a lot of paperwork. Aside from your patience and your pen, you will need to make sure that you bring the following things to your closing:
Two forms of identification, one of which is a photo ID. Make sure that the name on your photo ID matches the name on your mortgage. This is particularly important for anybody who recently changed their name through marriage or divorce.
Proof of the wire transfer or certified funds. Talk with your real estate professional in advance so that you know exactly what’s expected.
A copy of your contract with the seller. You want this close at hand in case there’s any confusion or discrepancies in closing paperwork.
Proof of homeowners insurance. This is likely a requirement from your lender and needs to be ready.
Your lender may have one or two additional documents they want you to provide at closing. If so, make sure that you put everything together in a folder so that you aren’t scrambling to find what you need.
It’s normal to be a little nervous about your closing day. This is, after all, one of the most significant days of your life. Fortunately, you can lean on your real estate professional throughout this process and that’s bound to make for smoother sailing.