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Prepare to Close on your House

Closing on your house is such an exciting time, but you should be prepared before it happens, so it goes smoothly.

After you place a bid and sign a sales contract, a lot goes on behind the scenes. The more you understand the smoother the process will go. Here’s what to do before a closing.

Get an Inspection

Lenders don’t require an inspection, but it’s always a good idea. Real estate agents and appraisers only see the ‘surface’ issues. What if there’s something wrong with the home that would cost you thousands of dollars to fix? You’d rather know upfront what a home will cost to live in safely than finding out after you own it and learn it’s a money pit.

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A home inspection may lead to some difficult discussions about a property’s flaws. A buyer may recommend that the seller employ a contractor to repair it, receive a credit (a discount on the purchase price) for fixing it themselves, or simply leave it alone. Sellers can choose either option or simply refuse both and negotiate from there, but this increases the possibility of the buyer walking away from the deal.

Pay for the Appraisal

All lenders require an appraisal. It’s how they determine the collateral (the home) is worth at least as much as they’re lending you. If you default on the loan, they know they can take possession of the home and sell it to get their money back.

Stay in Contact with your mortgage advisor

The underwriter holds the key to your loan approval. Even if you were pre-approved, there will be conditions you must satisfy. The faster you provide the documents required, the smoother your closing will go. If you don’t hear from them for a while, check in to make sure there aren’t any missing documents.

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Bring the Right Documents to Closing

Know what’s required of you at the closing. Most buyers must bring proof of one year’s paid premium for homeowner’s insurance, a picture ID, transfer stamps (if your county requires it), trust paperwork if you plan to put the home in a trust.

Real Estate Agency

Know how Much you Need at Closing

Besides the paperwork, you’ll likely need cash at the closing too. You’re entitled to a copy of your Closing Disclosure three business days before you close on the loan, so you should know well ahead of time how much you need.

You must bring the funds as a cashier’s check or have the funds wired (beforehand) – title companies don’t allow personal checks.

Don’t Do These Things before Closing

To keep your loan approval and ensure your closing goes well, don’t do the following until AFTER you close:

Change jobs
Make large deposits in your bank account
Take out large withdrawals from your bank account
Rack up credit card debt
Apply for new credit

Bottom Line

Closing on your home purchase is exciting! If you take the steps above, it should go smoothly, although any financial transaction can have its hiccups. The key is to work closely with your real estate agent and lender to make sure you’ve handled all the details to close the loan on time.

If you got pre-approved for financing before looking at homes, you did some of the legwork beforehand and should be in good shape to close on time.

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