How to Prepare for a Closing

How to

Prepare for a

g n i Clos

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Method 1. Finalizing the Administrative Aspects of the Closing 1. Finalize your loan.

Remember that the closing is the finalization of the home sale transaction, where you will sign the documents and hand over the checks, so the details of the sale of the home should be finalized before the closing date. Arrange to meet with your lender before the closing date to ensure that all necessary paperwork is complete and your loan is finalized.

2. Obtain homeowner’s insurance.

As a condition of a mortgage, almost all lenders will require a home buyer to purchase homeowner’s insurance. Homeowner’s insurance will provide you with protection from disasters occurring on, or to your new property. Your homeowner’s insurance policy should list the buyers as insured, as well as the lender.

Once you purchase the policy, you should make sure to have the insurance company send you a proof of insurance document. You will need this documentation at the closing, so make sure you obtain insurance in advance of the closing date.

The typical deadline is five days to apply for insurance and 15 days to waive the contingency or to rescind the contract. If you learn that the property is not insurable, too expensive to insure, or that you have other options, then you can rescind the contract and get your earnest money back. If you cancel the deal after the insurance contingency period to apply has expired, but before the contingency to submit the insurance binder to the lender expires, then you may have to prove that you actually applied for the insurance within the five day period. Contact your insurance agent as soon as you complete your loan application and get approved.

3. Conduct a title search and obtain title insurance.

A title search is used to determine “clean title� ie. that the seller has a legal right to transfer ownership, and is very important for ensuring that a buyer receives title to property that is free from the ownership rights/claims of others. Lenders require a home buyer to purchase title insurance in order to obtain a mortgage. A title insurance policy is a type of insurance that protects the buyer and the lender in the event there are problems with the title to the home after the sale. Read over the policy carefully and ask for clarification if anything is unclear.

The seller usually pays for the title insurance policy for the buyer and the buyer pays for the lender's policy.

Keep in mind that a title insurance policy will not protect against any unrecorded liens, such as outstanding water bills or code enforcement issues. Make sure that you check with local providers, the homeowners association, and the city or county for any pending actions or issues as well.

As with homeowner’s insurance, you will need proof of your title insurance coverage at the closing, so make sure to obtain it well in advance of the closing date. The title contingency default is also usually five days from the date of issuance or receipt, depending on how the contract was written. All contingencies can be extended to a date other than the default date prior to the offer being written. However, after the offer has been written and accepted, it would take a mutually agreed upon addendum to change or extend the contingencies.

Method 2. Preparing to Move Into the Property 1. Schedule an appointment to walk through the property one last time.

Before you finalize the purchase of your home, you should do a final walk through a day or two before the closing. By the time you are ready to close, you should have gone through the house several times, and had a home inspection done. The purpose of this final walk through is not to try to find problems with the home (that should have been done long ago), but rather to make sure the seller has held up his or her end of the bargain by making the repairs you have specified in the contract and left behind any appliances they agreed to leave.

To make the final walk through appointment, ask your real estate agent to set it up with the seller’s agent. If you notice anything unusual, your real estate agent should notify the seller’s agent immediately to get the issue resolved.

Also, keep in mind that issues can be resolved after closing on the house if you are closing soon and cannot wait. An addendum can be added to the contract to hold parties accountable to what is written. This addendum will need to be signed prior to closing.

2. Ask any last minute questions.

While you certainly can ask questions at your closing, if you have any lingering questions before the closing, you should ask them well in advance. Contact your loan officer about any mortgage questions, your attorney or title officer about questions relating to title, and your real estate agent about any other questions you may have about the deal.

You may have a concern that will take time to investigate, require the revision of documents, or require repairs to be made to the property. Such issues may mean that the closing cannot take place as scheduled, so make sure to have all your questions addressed well before the closing date.

3. Transfer utilities accounts.

Prior to the closing date the buyer should arrange to have the home’s utilities accounts transferred into his or her name as of the closing date. Contact the individual utility companies and make the necessary arrangements. This step may be required for the closing to take place, and is also a great idea since it allows the home to be ready for move in on the closing date.

Be aware that this is often not possible to arrange prior to closing. Many utility companies are strict and will not change services over until you can produce a deed to the house.

Method 3. Completing the Closing Process 1. Set your closing appointment.

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Once you have satisfied all of your loan agreement requirements, and have determined that no issues with the property exist, you are now ready for your closing appointment. A closing appointment is handled by a closing agent, which is a third party recommended by the real estate agent or lender, who verifies all closing documentation and ensures that all payments are received by the relevant parties. Contact the closing agent directly in order to schedule a closing appointment.

The closing agent will schedule the closing appointment with the buyer and seller. However, keep in mind that these appointments are usually separate. The buyer and seller will not usually sign paperwork during the same appointment.

The lender will ensure that the closing documents are delivered to the closing agent.

2. Ensure that you have the necessary closing costs.

Since closing costs are calculated to the exact date of the closing, you will not know the final closing amount until you have set your closing appointment date. Your mortgage lender will have provided you with an estimate of closing costs to use as a guideline, although that amount can fluctuate. In general, closing costs are about 3 to 5 percent of the total loan amount. In certain situations, a seller may be willing to pay some or all of the closing costs if it is negotiated in the contract.

You should ensure that you have the required funds available in your account as of the closing date. Most banks will place a hold on checks deposited into an account before they are available, so make sure to complete any necessary deposits into your account before the closing date.

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The closing agent will schedule the closing appointment with the buyer and seller. However, keep in mind that these appointments are usually separate. The buyer and seller will not usually sign paperwork during the same appointment.

The lender will ensure that the closing documents are delivered to the closing agent.

3. Collect and review all relevant closing documents.

Review the mortgage loan agreement and the mortgage note for potential discrepancies and errors. Also make sure to collect and review the settlement statement, which contains an itemized list of all of the closing costs associated with the mortgage loan. Make sure you have relevant documentation of your homeowner’s insurance, and a receipt of your first year homeowner’s insurance premium.

Make sure you have a cashier’s or certified check in the amount of your down payment and closing costs. Remember to contact the lender a few days before closing to obtain the exact closing amount needed. The escrow officer will usually relay this information to you. The lender approves the final settlement statement that the escrow officer prepares and the down payment goes to the escrow officer to be distributed.

Keep in mind that there are closing costs that are not associated with a loan too, including the escrow fees, property taxes, and recording fees. If you can obtain a second mortgage or a refinance, or equity cash from your home or other property, then the closing costs will usually not be as high as a first origination loan. Talk this over with your lender.

4. Attend your closing meeting with the closing officer, lender representative and your attorney or Realtor.

The closing officer will lead the closing process and ensure that all relevant documents have been verified and signed, and that all of the sales transaction money has been properly distributed to the relevant parties. Some buyers have their attorney attend the closing, and in some circumstances both the seller and real estate agents will also attend a closing. However, it is also extremely common for both the sellers and buyers to complete all closing paperwork in separate rooms without ever seeing one another. The following documents will be reviewed by the closing officer: The mortgage agreement, mortgage note and property deed.

The settlement statement containing an itemized list of closing costs, which typically includes all closing costs, a summary of all past transactions leading up to the closing, commissions paid to real estate agents, escrow amounts deposited to cover property taxes and insurance, title charges and the net amounts owed to seller and due from the buyer.

5. Complete the closing process.

The final part of the closing process is the distribution of the funds generated by the sale. The closing officer will distribute the funds you provide, and present checks to the seller, real estate agents (when applicable), and to all other parties named on the settlement statement.

How to

Prepare for a

g n i Clos

Image Source:

Florida Title Insurance

Article Source:

wikihow