If you’ve reached the point of closing on a dream property, you may be releasing a sigh of relief, but the job is not done yet. There are several things that you need to prepare for your real estate closing day before the house is truly yours.
What is a Real Estate Closing?
Closing marks the day when the property title passes from the seller to the buyer. To formalize the process, you need to go into the office and sign the final documents.
In some areas of the country, this is done in the presence of an escrow officer and the seller, but sometimes it only requires you to meet with a neutral third party.
What Do I Need to Bring on Real Estate Closing Day?
Closing day takes a while to get through because there will be many different documents to examine and sign, including a promissory note and a deed of trust. To prevent the process from experiencing unexpected delays, make sure to bring these items with you.
The closing agent needs a photo ID to verify your identity on closing day because your signatures will have to be notarized to consider the process official. You will need some form of state-issued identification to fulfill this requirement, such as a passport or a driver’s license.
Proof of Homeowners Insurance
Lenders need proof that you have homeowners insurance in place before beginning a mortgage, which will provide coverage for damages to the home. The agent needs evidence that your insurance is already active and that you have paid for a year’s worth of coverage, so it is a good idea to also provide a receipt.
A Copy of the Purchase Agreement
On closing day, you will be signing a lot of papers that will formalize the transfer of property from the seller to you. To make sure that the details of the final documents are the same as what you have negotiated and agreed on, bring a copy of the purchase agreement.
Cashier’s or Certified Check
There will be some closing costs on the signing day for which you will have to set aside some funds. The Real Estate Settlement Procedures Act (RESPA) requires loan officers to send you the estimated costs at least three days before the closing, so you will be aware of how much you need to prepare. The agent will also inform you about the specifics of the payment process, whether one check will suffice and if you are allowed alternative forms of payment.
Documentary or Transfer Stamps
Some states require you to bring the official stamps for the property deed and/or mortgage forms. This acts as a transfer tax for the closing process. Make sure to confirm with your agent or attorney if this step is necessary, and prepare ahead of time.
3 Things NOT to do Before Closing on Your New Home
The moments before closing a deal on a house are some of the most crucial and sensitive. These are some of the important things you should avoid doing before your deal is secured.
1. Don’t Undergo Employment Changes
A key part of getting approved loans is your financial stability. If you change jobs or quit your current occupation, it may cause the seller to rethink their decision, or it may prevent you from securing a suitable mortgage loan.
2. Don’t Use Credit Cards Excessively or Open New Accounts
Your credit utilization and the amount of hard inquiries you make (which happens when you open new credit accounts) can harm your credit score, which may affect the seller’s decision. A bad credit score will also impact your ability to land a suitable loan with a low interest rate.
3. Don’t Change Bank Accounts
When you have reached the point of closing a deal, the agent, attorney, and any other third party are already familiar with your current bank account history. Changing bank accounts will complicate matters and may result in the agent having to take more time to ensure your bank account does not raise any red flags. The transfer of funds may then take longer and create greater confusion.
Preparing for Closing Day
Your closing day is one that you will likely approach with much anticipation. The house of your dreams is just about to become yours! To make sure everything goes well, anticipate any possible documentation request and refrain from making changes in your life that may delay the process.
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