Welcome to your “Closing on a Home Checklist!” This checklist consists of everything home buyers need to do before they get the keys to their new house. Since you can see the finish line in your home-buying journey, you want nothing to go wrong. So, we have put together a home closing checklist, which outlines things you need to do in those days leading up to closing.
Get All Contingencies Squared Away
Most purchase agreements have contingencies, which are things that buyers must do before the transaction is official. The most common contingencies include:
- Home Inspection – This gives buyers the right to have the home professionally inspected. If something is wrong, you can request it be fixed or you can back out of the sale.
- Appraisal – With this contingency, a third party hired by your mortgage lender evaluates the fair market value of the home. If the appraised value is less than the sales price, the contingency enables you to back out of the deal without losing your earnest money deposit.
- Financing – This contingency gives you the right to back out of the deal if your mortgage approval falls through. You have a specified time–period, as stated in the sales contract, during which you have to obtain a loan that will cover the mortgage.
Clear the Title
When you buy a home, you “take title” to the property and establish legal ownership. As part of the closing process, your mortgage lender will require a title search, and you will need to purchase title insurance to protect you from legal claims to the house.
Sometimes distant relatives may surface with a claim that they actually own the home and that the seller had no right to sell it to you. However, clearing title will ensure this doesn’t happen. As the home buyer, you are entitled to choose the title company. You can get recommendations from your real estate agent, mortgage lender, and friends. Just be sure to check out the license and reputation of each title company.
Final Mortgage Approval
Before you can go to the closing table, your home loan must go through the underwriting process. Underwriters are like real estate detectives, it is their job to make sure you have represented yourself and your finances truthfully, and that you haven’t made any false or misleading claims on your loan application.
The underwriter will check your credit score, review your home appraisal, and ensure your financial portfolio has remained the same since you were pre-approved. Since underwriting typically happens shortly before closing, you don’t want to do anything while you’re in a contract that’s going to hurt your credit score. That includes buying a car, boat, or any other large purchase that has to be financed.
Review Your Closing Disclosure
If you’re getting a loan, one of the best ways to prepare is to thoroughly review your closing disclosure, also known as a HUD-1 Settlement Statement. This official document outlines your exact mortgage payments, the loan’s terms, and additional fees you’ll pay called closing costs.
Most sales contracts allow buyers to do a final walk-through of the home within 24 hours before closing. During this stage, you’re making sure the previous owner has vacated. You’re also double-checking that the home is in the condition agreed upon in the contract. If your home inspection revealed problems that the sellers agreed to fix, you will want to make sure those repairs were made.
Bring Necessary Documents to Closing
Make sure you bring the following items when you head to the closing table:
- proof of homeowner’s insurance
- a copy of your contract with the seller
- your home inspection reports
- any paperwork the bank required to approve your loan
- a government-issued ID (newlyweds who just changed their name: The ID needs to match the name that will appear on the property’s title and mortgage.)
Plan to sign a ton of paperwork. An attorney or settlement agent will guide you through the process. When you’re done, you will collect the keys and you’re finally home free!
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