Closing

Know exactly what's involved for a smooth finish

The process of closing a home loan differs across the country. However, there are common elements of this process. Knowing what to expect and being prepared will make the closing an event you look forward to, rather than one to dread.

1. Set the Closing Date:

Not all closing dates are equal. Make sure to set a date that's in your best interest. Some things to consider:

Does it give you enough time to prepare your move?
Is it near the end of your lease so you won't pay unnecessary rent?
Are there tax implications (if it falls at year's end, would you be better off pushing it to January)?

Closings must be coordinated with many parties that may include the seller, the lender, yourself, the seller's mortgage holder, respective attorneys, the real estate agent, the transfer agent (if it's a co-op), the managing agent (if it's a condo) and the title company representative.

2. Select a Closing Agent:

A third-party agent of your choosing is needed to prepare the required documents, disburse the funds and activate the transfer of ownership. Your attorney, the escrow agent, the title company or a professional closing agent can act in your behalf.

3. Title Search and Insurance:

Title insurance companies review the history of your new home's ownership to insure that no one else has claims on your property. Title insurance is required because it protects you and your lender against loss resulting from a title dispute.

4. Property Survey:

Sometimes title insurance companies require a survey of the property to verify zoning location and boundaries.

5. Homeowner's Insurance:

Most lenders require this. It protects your home and its contents from fire, theft and most disasters. Sometimes additional hazard and/or flood insurance is required.

6. The Final Walk-Through:

This is your last chance to inspect your new premises and make sure that the seller has completed all repairs and met the conditions specified in the purchase contract.

7. Rate Lock:

Often, you may select to lock in an interest rate at the time of your mortgage commitment and lower it before closing if market conditions change for a nominal fee. Some lenders allow you to lock in your rate anytime from application up until five business days before your scheduled closing.

8. Good Faith Estimate:

Before your closing, your lender will give you a final "Good Faith Estimate of Settlement Costs" to help you prepare for the closing.

9. Last-Minute Detail Check:

A few days before the closing, you'll want to finalize all details with your closing agent.

Closing costs and escrow amounts: Your Good Faith Estimate may not include all closing costs such as interim interest or property taxes. Finalize actual costs at this time with your closing agent to avoid last-minute surprises.
Acceptable method of payment: In most cases, certified or cashier's checks must be prepared in advance.

Miscellaneous items: Some counties require photo ID, evidence of hazard or flood insurance or other miscellaneous documents. This is the time to gather any ID and miscellaneous paperwork that may be required at closing.