Mortgage & Equity
10 Preparing for Closing
This section will discuss:
The preparations you need to make for closing.
Closing, or settlement as it's sometimes called, is the grand finale -- the process that makes that house officially yours. In the weeks before the closing, you'll need to take care of several matters:
- Set the date - Once you have your approved loan and your credit union's commitment letter, it's time to set a date for the closing. Usually the real estate professional will take care of arranging a time that suits you, the seller, your credit union lender and the closing agent. (In some areas, these parties do not come together for a formal closing. Instead, an escrow agent processes the paperwork and collects and disburses funds.) The closing must be before the expiration of your commitment letter and rate lock-in, if you have one.
- Choose a closing (or settlement) agent - Depending on where you live, a lending institution, title insurance company, escrow company, real estate broker or attorney may serve as the closing agent. You may have some say about who is selected. If so, shopping around to find out about fees may save you money.
- Meet conditions - Check your commitment letter from the credit union. Does it mention any conditions to the loan offer, such as bringing the house up to the building code or addressing zoning questions? Find out whether those must be done before closing.
- Get homeowner's insurance - Homeowner's insurance covers fire, theft, certain natural disasters and personal liability if someone is injured on your property. Shop around and compare insurance companies. You may be able to save by obtaining a joint car/house policy. You'll need to bring with you to the closing the insurance policy and a paid receipt for the first year's premium. In some cases, your credit union may escrow your premium amount instead. It's figured into your monthly payment, and then your credit union sets that amount aside in an escrow account and pays the insurance bills when they're due.
- Take a final walk-through - The day before closing, take one more tour of your new house. Make sure everything is as you expect it to be. Were any appliances or furnishings supposed to be left behind for you? Have all the repairs you asked for as a condition of sale been completed to your satisfaction? If you find any problems, you have the right to delay the closing until these are corrected. You'll also want to schedule a guided tour of the house with the seller, either before or right after the closing. See more details about this in the Making Your Move section.
- Start planning your move - Now's the time to draw up a moving schedule. Make arrangements with a professional mover, if you plan to use one. Start packing boxes. See more detailed information in the Making Your Move section.
Other Preparations
Your credit union lender will attend to various other matters before closing. Your lender will obtain a title search to be sure the title to the home is clear. The title search verifies that the seller is the owner and also turns up any liens (legal claims) against the property, such as an IRS lien for taxes owed or a contractor's lien for unpaid bills. The seller must pay any such claims before or at closing.
Your credit union lender will obtain title insurance before closing. This protects both the lender and you, the buyer, in case any flaw in the title turns up after closing.
Sometimes the lender also will want to get a survey of the property before closing, to make sure the property's boundaries are correctly described on the purchase-and-sale agreement.
The costs of the title search, title insurance and survey are your responsibility. You will pay them as part of the closing costs.
Bring Along on Closing Day
- Evidence that you have obtained homeowner's insurance. Bring the policy and a receipt showing that the first year's premium is paid. Your credit union lender also may escrow future premiums.
- A picture identification of all the owners-to-be (those whose names will be on the deed).
- Information about any transfers of property or prorations (such as for utility bills) between you and the seller. Often the real estate professional will take care of this. Just be sure someone has attended to it before your closing day.
- You may need to bring a certified or cashier's check, rather than a personal check, to pay closing costs. If so, your credit union lender may take care of this for you, drawing the check on your credit union account and bringing it to the closing. Although there should be no surprises on closing day as to costs, it's a good idea to bring your checkbook along, too, just in case something got overlooked.
