Unfamiliar situations are nerve-wracking for everyone. From blind dates to root canals, it’s natural to dread the unknown. Fortunately, closing day—also known as settlement day or escrow day—doesn’t have to be a panic-inducing experience. When you know what to expect, you can anticipate one of the most important days of your life with joy instead of uncertainty.
Expect a crowd. Closing requirements are determined by your state and county, but it’s not uncommon for a half-dozen or more individuals to attend the event. You’ll be joined by your real estate agent, the home seller, the seller’s real estate agent, representatives from your lender and the title company, and a closing agent. Depending on your location and situation, one or more attorneys may also be present.
Expect to sign your name dozens of times. Numerous legal documents are reviewed and signed on closing day. These include documents related to your mortgage as well as those transferring ownership of your new home. Take time to read through each one and ask as many questions as necessary to understand the transaction fully. Don’t sign documents that are incomplete or contain errors—even minor ones.
Expect to bring a cashier’s check. Buying a home generally requires the payment of fees—such as those for the appraisal and title insurance—that are due on closing day along with the balance of your down payment and any fees for points that you haven’t chosen to roll into your mortgage principal. Under new rules established by the Consumer Financial Protection Bureau, your lender is required to provide you with a Closing Disclosure document three days prior to your closing. In addition to reviewing the details of your mortgage, the document will clearly state your closing costs and how much cash (in the form of a cashier’s check) you’ll need to bring to close.
Review this document carefully as soon as you receive it, comparing it to the Loan Estimate you received from your lender after submission of your mortgage application. In addition to confirming that the loan terms—including amount and interest rate—are the same as you were originally quoted, pay particular attention to origination and third-party charges.
Expect to pay property taxes in advance. Most lenders will require the creation of an escrow account at closing for the advance payment of property taxes (and sometimes homeowner’s insurance as well). You’ll need to bring a cashier’s check to fund the escrow with the minimum your lender requires. You’ll continue to make deposits to the escrow account with each mortgage payment you make. Your lender will then disburse payments for your property taxes (and homeowner’s insurance, if required) to the appropriate party as they are due.
Expect to prove you have homeowner’s insurance. If your lender allows you to purchase your own homeowner’s insurance, you’ll need to prove that you’ve done so. Bring a copy of your policy showing your new home will be covered as of the date of your closing. You’ll need to bring proof of payment—often of a year’s worth of insurance in advance—to the closing as well.
Once all the documents have been signed and funds transferred, you’ll officially become a homeowner and can walk away from the closing table with keys to your new property and copies of the forms necessary for the transaction. Put those papers in a safe place; experts recommend holding on to them for as long as you own the home, plus three years.
Source: Ghost Post – Text by Angela Rose | Photo by Micolas/Shutterstock.com