As the name suggests, a closing is the last step in purchasing and financing a home. In the case of a home loan, a closing day concludes a home purchase and the closing of a loan on the same day. Closing day is deemed one of the most important days of the purchasing process. Everyone wishes it to be pleasant and hassle-free.
A buyer’s active participation is necessary to ensure everything goes according to plan. A few preliminary steps given below can provide help in this regard.
Preliminary Document Analysis
Documents such as contracts, evidence of mortgage and homeowners insurance, closing disclosures and inspection reports are usually available for buyers in advance. They should go through these documents in detail to ensure that there are no ambiguities.
An Ultimate Walk-through
Buyers are usually permitted to undertake a final walk-through examination of a home. This walk-through is provided at least 24 hours before the closing day and buyers are expected to point out anything that deviates from the contract that a buyer intends to sign. It also includes potential damages or repairs.
Closing Costs
Buyers are expected to pay an additional cost for closing a home loan. The particular closing cost may vary depending on lender’s policies and location. The closing costs include expenses such as notary, attorney and origination fees. Moreover, the explicit closing costs are mentioned in the closing disclosure.
The buyer should have money available for closing costs before the closing day of a home loan, which is typically when this payment is made.
Who Is Going to Be There?
The closing day procedure may differ depending on region and creditor, but the following people are generally present on a closing day:
- A notary public
- A closing agent
- Buyer’s attorney
- Seller’s attorney
- Lender’s representative
- The seller or seller’s representative
- Real estate professionals (from buyer’s and seller’s side)
It is the responsibility of a closing agent to administer all of the procedures of a closing day and make sure that the process runs smoothly and transparently.
Which Documents Are Necessary?
The entitled organization’s official and the loaner’s representative provide the list of all the documents required on a closing day. These documents generally include the following:
Closing Disclosure:
A document containing all details regarding the monthly payments, closing costs, mortgage loan, and loan terms. Buyers are expected to receive it a few days before the closing day.
Deed of Trust:
A document that provides the lender with a claim against the title in case a buyer fails to fulfill commitments.
Certificate of Occupancy:
A legal and official paper for buyers moving to a newly-built home.
Mortgage Note:
Contains the terms and conditions of a loan in addition to the steps that lenders can take in case of failure of payment. It is the commitment of a mortgagor to repay the loan.
The buyer should be informed in advance whether the documents are to be signed personally or electronically.
Avoid Potential Difficulties
Buyers are expected to be attentive and particular about every aspect of the closing-day arrangements. A lack of attention to detail might result in last minute annoyances, disagreements, and delays which, of course, no one prefers. The prospective stumbling blocks faced by the buyers might include:
- Inability of the buyer to make a full payment
- Non-clearance of property lines by seller
- Failure of buyer to complete walk-through
- Last-moment withdrawal of lender financing
Such drawbacks can be avoided when all involved parties participate in a detailed conversation regarding the loan and its accompanying documentation.