The Closing Process
Preparing for closing
Before closing, there are several important steps to take. You should get a survey of the property done, and have a title search conducted. If the lender requires a termite inspection, you will also need to arrange for that. Your real estate sales professional will assist you in all of this.
A closing agent should be engaged to handle disbursement of funds, preparing and recording closing documents and all other closing activities. Again, your REALTOR® should be able to make a recommendation.
Understanding closing costs
You will probably have expenses in three different categories: government-imposed closing costs; mortgage-related closing costs; and buyer costs to the seller.
Mortgage-related costs paid at closing may include:
- loan origination fee
- loan discounts points
- mortgage insurance
- appraisal fee
- prepaid interest
- escrow accounts
- credit report fee
Any special agreements you've made with the seller regarding your costs versus his or hers should be specified clearly in the sales contract.
Setting a closing date
You will learn the final date chosen for closing after the lender has approved your mortgage loan application. Prior to that, in the sales contract, there will be an estimated closing date.
The lender, and REALTOR® will work together in setting the date. Ask your REALTOR® for the location and time of the closing meeting, and what, if anything you'll need to bring. If you have an interest rate lock-in, remember to be sure the closing takes place while it is still valid and before your mortgage commitment letter expires.
Ask your closing agent for a statement that lists the date, place, and time of the closing meeting and the items you will need to bring.
At your closing
Either during or shortly after your closing, you should receive several original copies: The deed which transfers ownership from the seller to you; itemizing funds which will be paid by the seller and the buyer at closing; and a promissory note, sometimes referred to simply as Note, with the detailed terms of the loan and your promise to repay it, including the address and agreed-upon dates for making your payments.
Keep a copy of everything you sign, including homeowner's insurance policy and title insurance records, in a safe place. When it comes time to file your taxes, you'll need the settlement form, which lists loan discount points and real estate taxes you paid at closing. Some of these may be tax-deductible.
After your closing
Congratulations! You are now a homeowner, and you'll want to do everything in your power to protect your investment.
By maintaining or even enhancing the appearance of your home and making sure that necessary repairs are made, you could be increasing your home's value. You'll want to keep your finances in shape as well, so you can make timely payments and let your home's equity begin to work for you.
Remember that late mortgage payments can impact your credit rating. If you are consistently late, you could even lose your home. Nothing's worth that! If you get into a financial bind and fear you will have difficulty making your payment on time, contact your lender immediately.
If you consistently fail to make timely mortgage payments, you could lose your home and the good credit you've worked to maintain. Contact your lender at the first sign if you are having trouble making your payments.
You can potentially increase the value of your home by keeping up with repairs, and maintaining and enhancing the condition and appearance of your home.