[Buyer]
Closing Day
If you have come this far, then this means that it is almost time for congratulations, but not yet. Do not forget to tie up loose ends. This is the final step of becoming legal owner of the your new home.
When you submitted your initial offer you included a closing date. Either the seller accepted the date or the date would have been negotiated in the purchase agreement contract. Even though the buyer and seller may agree on a date the lender and title agency may need more time to execute the deal but you’ll know that before the closing and you’ll still all have to mutually agree to the closing date.
Home Inspection Contingencies
As a buyer you’ll most likely want to protect yourself and hire a licensed home inspector to know what you’re buying and to make sure there are no major issues with the home you’re purchasing. Usually the offer you submit will be contingent on a home inspection so if there are any major issues you can negotiate with the seller and either get the repairs made by the seller or a lower purchasing price. If you found issues during the home inspection and came to an agreement with the seller for repairs or replacements, make sure those changes are made before the closing or if it was a credit negotiated be sure it’s included in your purchase contract.
Final Walk-Through Inspection
More of a formality than anything else, the final inspection takes place a day before or the day of the closing. You’ll visit the property to verify that all is in working order; everything is the same as when you last viewed the property, that there are no extra items left behind, and that everything included in your purchase agreement is still at the property.
All of the seller’s belongings should have been cleared out unless there were things you mutually agreed to keep. Test major appliances, light fixtures, toilets, windows, doors and basically anything you can think of so if there is a problem you can bring it up before the closing.
If anything that was promised to be fix or replaced perhaps as a result of the property inspection, you’ll want to make sure the work was completed during your walk-through.
Home Services and Utilities
You may want to get a list of all the seller’s home services and utilities so that you can switch them over to your name while the seller sets up a shut off date to disconnects the services in their name. The seller will know what services helped keep their home running smoothly, for example annual pest control, filter changes, garbage removal, landscaping services, and of course things like basic utilities such as gas, oil and electric, and can be a great resource for helping you put new services in place.
Closing
The core functions that happen at the closing are:
- the home’s title is going to be transferred from the seller to the buyer;
- the closing agent/attorney will register the new deed with appropriate government office,
- the buyer will bring a cashier’s check (or wire) to cover all remaining closing costs and fees,
- the proceeds of the sale are going to be distributed to the seller;
- discharging any outstanding liens on the property;
- the real estate agent(s) involved in the transaction will receive their commission fees; and
- if the home is going to be financed the buyer will sign the mortgage note creating a lien on the property in favor of the buyer’s lender.
Closing Disclosure
Days before the closing (at least 3 days) the lender is going to send you a “Closing Disclosure” showing you how much you will actually have to pay at closing. The Closing Disclosure will have the terms of the loan covering things like your monthly mortgage payment, closing costs and details of who pays and receives money at the closing and may include things real estate commissions, title insurance, prorated property tax and homeowner association fees. The Closing Disclosure provides a line-item breakdown of the individual costs and fees. Sample Closing Disclosure:
https://files.consumerfinance.gov/f/201311_cfpb_kbyo_closing-disclosure.pdf
Closing Costs
Your lender should have provided you with a Loan Estimate early on that you could compare with the Closing Disclosure. Talk to your loan officer and escrow agent/attorney to determine your payment method for closing costs. You’ll need to get either a cashier’s check (not a personal check) in the amount due stated in the Closing Disclosure or elect to have the funds wired electronically. Figure it out at least a week before closing or sooner.
Homeowners Insurance
Your lender will ask you for proof of homeowner insurance so bring a copy of the homeowners insurance policy to the closing to make sure there’s no delay in your closing. You’re lender will be able to tell you what type of insurance coverage is required (e.g., full replacement cost, hazards like fire, wind, hail, vandalism, flood insurance, etc.).
Your loan officer should be able to give you a list of what you’ll need to bring to the closing like any outstanding documents required by the lender or title company. It’s a good idea to bring a photo id (driver’s license or passport) and your personal checkbook for any last minute changes such as oil left in tank that you will be required to pay for at the time of closing.
Mostly likely attending the closing will be your attorney, maybe a notary, someone to represent the lender, real estate agents, and surprisingly the seller most likely won’t be there. If you are unable to attend the scheduled closing, arrangements can be made depending on the circumstances. The seller should arrange to have all property keys, garage door openers and any other important information at the closing so you may receive these items at that time.
You should be able to move in after the closing unless you’ve made other arrangements with the seller which should be detailed and outlined in your contract where the seller can rent-back the house for a period of time, which is rare and something you don’t have to agree to, otherwise the house is yours and ready to move in when you are.
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