Courtesy of Wells Fargo
Courtesy of Wells Fargo

You’ve reviewed your spending plan, been preapproved for a mortgage, and made an offer on the home of your dreams. Now, it’s time to close — the final steps before transferring of the property deed to your name after satisfying all the conditions of the purchase contract. Here are some things to consider as you finalize your purchase.

What should happen leading up to the purchase?

• Schedule a home inspection and appraisal. This is something your lender might require you to do before providing a mortgage, depending on the state you live in. Some lenders want to make sure the home is worth the purchase price and that there isn’t any structural issue that may cause problems, which is also in your own interests.
• Don’t open any new accounts during this crucial time, because it could impact your financing if your credit takes a hit. Opening a new account is a hard inquiry on your credit, causing a dip in your score. It may also lower the average age of your all your accounts. If you need help reading your credit report, take a look at the resources on the Hands on Banking website.

Prepare your documents for the closing

Double-check that you have everything your lender asked for, or else the completion of your loan and purchase may be postponed:

• About three days before closing, you’ll likely receive closing documents. This package will include copies of everything you’ve turned in to your lender, as well as additional documents and paperwork you should read over.
• Review the closing documents to understand all the terms of financing, and the responsibilities of the lender, seller, and buyer. Take note of what you can do if your lender or seller does anything you haven’t agreed to, and don’t sign documents without fully understanding them.
• Also prepare your:
• Required documents, which typically include a government-issued photo ID, copy of the contract, home inspection reports, and proof of homeowners insurance.
• Banking paperwork laying out your means of paying back the loan, and your down payment funds.

What are some things to expect at closing?

Multiple parties will be present at the closing, such as:

• Your and the seller’s real estate agent. The real estate agents may choose to attend to ensure the closing transaction goes through.
• An escrow company. Depending on your location, an escrow officer may need to be present to handle funds that need to be exchanged.
• Your attorney and/or the seller’s attorney. In some states, an attorney may need to be present to complete the legal transfer of the title.
• Your lender. Your lender may be present to ensure the transaction goes smoothly.

Here are some examples of items you may consider reviewing before you close:

• With your lender, confirm if anything has changed since approval, such as your annual percentage rate (APR) — i.e., your interest rate — or any other term.
• With the seller, confirm:
• Copies of repair receipts
• Utility company information
• Trash and recycling collection days

When you’re ready, you and the seller will sign off on the purchase documents, and you will sign off on the loan documents. You may be required to wire your funds, or you may need to bring in a cashier’s check for closing costs.

After the closing documents are completed and the funds have been transferred, you’ll receive the keys to your new home.

WI Guest Author

This correspondent is a guest contributor to The Washington Informer.

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